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The Audit Lottery: Don't Ask, Don't Tell?

6 Pages Posted: 23 Jan 2008  

Joel S. Newman

Wake Forest University - School of Law

Abstract

The IRS has never audited more than two percent of returns filed. Therefore, as a general matter, whatever one puts in a tax return, there is a 98% chance that one will not get caught. This phenomenon is known as the audit lottery. Under certain conditions, tax advisors should be allowed to discuss the audit lottery with their clients. Even though this information might well persuade some clients to take very aggressive, or perhaps even fraudulent, positions on tax returns, the taxpayer should have a right to know about the audit lottery.

Keywords: taxation, tax evasion, audit lottery, professional responsibility

JEL Classification: H26

Suggested Citation

Newman, Joel S., The Audit Lottery: Don't Ask, Don't Tell?. Tax Notes, Vol. 40, No. 8, 1988. Available at SSRN: https://ssrn.com/abstract=1086732

Joel S. Newman (Contact Author)

Wake Forest University - School of Law ( email )

P.O. Box 7206
Winston-Salem, NC 27109
United States

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