MULTI-AGENT BASED SIMULATION OF THE DETERRENT EFFECTS OF TAXPAYER AUDITS

As a tool of enforcement, tax audits are thought to have both direct and deterrent effects on taxpayers. The direct effect is simply the difference between the tax liability as determined by an examiner and the amount voluntarily reported by the taxpayer. In contrast, the deterrent effect is an incr...

Full description

Saved in:
Bibliographic Details
Published in:Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association 2004-01, p.159
Main Author: Bloomquist, Kim M
Format: Article
Language:English
Subjects:
Audits
Compliance
Income taxes
Simulation
Studies
Tax audits
Tax evasion
Tax returns
Taxpayers
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:As a tool of enforcement, tax audits are thought to have both direct and deterrent effects on taxpayers. The direct effect is simply the difference between the tax liability as determined by an examiner and the amount voluntarily reported by the taxpayer. In contrast, the deterrent effect is an increase in voluntarily reported tax liability due to the existence of a program of taxpayer audits. This paper had two main goals. The first was to show multi-agent based simulation (MABS) models provide a way to incorporate several important characteristics of taxpayers and tax systems typically excluded from analytical models of tax evasion. The second goal of the paper was to describe the development of the Tax Compliance Simulator (TCS), a prototype MABS model developed by IRS to estimate the deterrent effects of tax compliance alternatives. Future enhancements of TCS will focus on incorporating tax year 2001 random audit data on approximately 46,000 taxpayers from the National Research Program.
ISSN:1549-7542
2377-567X