38 Pages Posted: 23 Mar 2010 Last revised: 11 Sep 2010
Date Written: March 20, 2010
Every spring, the federal government appears to deliver an abundance of announcements that describe criminal convictions and civil injunctions involving taxpayers who have been accused of committing tax fraud. Commentators have occasionally suggested that the government announces a large number of tax enforcement actions in close proximity to a critical date in the tax compliance landscape: April 15, “Tax Day.” Despite their provocative implications, these claims are speculative at best, as they lack any empirical support. This Article fills the empirical void by seeking to answer a straightforward question: when does the government publicize tax enforcement? To conduct our study, we analyzed all 782 press releases issued by the U.S. Department of Justice Tax Division during the seven-year period of 2003 through 2009 in which the agency announced a civil or criminal tax enforcement action against a specific taxpayer identified by name. Our principal finding is that, from 2003 through 2009, the government issued a disproportionately large number of tax enforcement press releases during the weeks immediately prior to Tax Day compared to the rest of the year and that this difference is highly statistically significant. A convincing explanation for this finding is that government officials deliberately use tax enforcement publicity to influence individual taxpayers’ perceptions and knowledge of audit probability, tax penalties and the government’s tax enforcement efficacy while taxpayers are preparing to file their annual individual tax returns.
Keywords: Tax Enforcement, Publicity, Tax Fraud, Tax Shelter, Tax Compliance, Press Release
JEL Classification: H20, H23, H24, H25, H26, H29, K34
Suggested Citation: Suggested Citation
Blank, Joshua D. and Levin, Daniel Z., When Is Tax Enforcement Publicized? (March 20, 2010). Virginia Tax Review, Vol. 30, 2010; NYU Law and Economics Research Paper No. 10-12. Available at SSRN: https://ssrn.com/abstract=1575803