Compliance effects of risk-based tax audits

Arbeitspapier

Tax administrations use machine learning to predict risk scores as a basis for selecting individual taxpayers for audit. Audits detect noncompliance immediately, but may also alter future filing behavior. This analysis is the first to estimate compliance effects of audits among high-risk wage earners. We exploit a sharp audit assignment discontinuity in Norway based on individual tax payers risk score. Additional data from a random audit allow us to estimate how the audit effect vary across the risk score distribution. We show that the current risk score audit threshold is set far above the one that maximizes net public revenue.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 7616

Classification and Topics

• Classification: Wirtschaft ; Microeconomic Policy: Formulation, Implementation, and Evaluation ; Tax Evasion and Avoidance ; Public Administration; Public Sector Accounting and Audits
• Subject: tax audits ; tax revenue ; tax reporting decisions ; income tax ; machine learning ; risk ; profiling

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Løyland, Knut ; Raaum, Oddbjørn ; Torsvik, Gaute ; Øvrum, Arnstein
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/198976
• Last update: 10.03.2025, 11:41 AM CET