Do Collateral Sanctions Work? Evidence from the IRS’ Passport Certification and Revocation Process

Penalties for tax evasion are typically financial, but many jurisdictions also utilize collateral sanctions that deny access to some government-provided service. To learn about the effectiveness of such penalties, we examine a U.S. policy restricting passport access for taxpayers with substantial ta...

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Bibliographic Details
Published in:NBER Working Paper Series 2021-07
Main Authors: Organ, Paul R, Ruda, Alex, Slemrod, Joel, Turk, Alex
Format: Article
Language:English
Subjects:
Certification
Collateral
Economic theory
Fines & penalties
Online Access:Get full text
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Summary:Penalties for tax evasion are typically financial, but many jurisdictions also utilize collateral sanctions that deny access to some government-provided service. To learn about the effectiveness of such penalties, we examine a U.S. policy restricting passport access for taxpayers with substantial tax debt, known as “certification.” We find an immediate and strong positive effect on compliance actions when a passport request is denied. We then take advantage of randomization during the policy rollout to identify the direct compliance effect of certification, and find smaller but non-trivial effects whose heterogeneity is consistent with measures of taxpayers’ value of having a passport.
ISSN:0898-2937
DOI:10.3386/w29029