Taxpayer Responses to False Accusation by the Tax Authority: An Experimental Investigation.

摘要

This paper examines the effects of erroneous automated adjustment notices on taxpayers' perceptions of procedural fairness of the tax authority, their future compliance, and choice to contest or comply with the notice. It is estimated that each year the IRS sends over one million erroneous adjustment notices to taxpayers, requesting unwarranted taxes. Although the error is not intentional, or even the fault of the IRS, I hypothesize that receipt of an erroneous notice negatively affects perceptions of fairness of the IRS, as well as future compliance. In a laboratory experiment I manipulate whether participants receive an erroneous notice, the tone of the notice as either friendly or standard, and the entity causing the error as either the tax authority or a third party. I also explore potential reasons why many taxpayers pay the unwarranted amounts requested in the erroneous notices rather than contest them. I find that procedural fairness of the taxing authority is compromised when an erroneous notice is received, but no evidence that it negatively affects future compliance. I also find that taxpayers are more likely to blame the tax authority for the error, regardless of who they are told caused the error. In a subsequent analysis in which I categorize participants based on their cheating patterns, I find that the pattern of cheating may partially explain why some taxpayers just pay the unwarranted amounts requested on the erroneous notice. My findings contribute to literature on procedural fairness and the behavioral tax compliance model and have potential implications for policy makers.