Sleeping with the Enemy: Taxes and Former IRS Employees

40 Pages Posted: 21 Apr 2015 Last revised: 9 Apr 2020

See all articles by John (Xuefeng) Jiang

John (Xuefeng) Jiang

Michigan State University

John R. Robinson

Texas A&M University; Texas A&M University - Department of Accounting

Maobin Wang

University of International Business and Economics - School of Banking and Finance

Date Written: March 30, 2020

Abstract

Using employment history data from LinkedIn, we report the number and characteristics of employees who joined public corporations after leaving the Internal Revenue Service (IRS) from 1980 to 2012. Public corporations hired more than 1,200 former IRS employees, a number similar to the number of hires made by accounting and law firms. Firms that hired former IRS employees with tax experience report a significant reduction in tax rate volatility but no reduction in effective tax rates. Holding constant the amount of uncertain tax positions, these firms report greater settlements with the IRS, pay fewer penalties, and purchase less tax-related services from their auditors.

Keywords: income tax, IRS, Revolving door, LinkedIn, tax compliance, tax penalties, tax rate volatility

JEL Classification: G18, H2, H25, H26, H32, J45

Suggested Citation

Jiang, John (Xuefeng) and Robinson, John R. and Robinson, John R. and Wang, Maobin, Sleeping with the Enemy: Taxes and Former IRS Employees (March 30, 2020). Available at SSRN: https://ssrn.com/abstract=2597292 or http://dx.doi.org/10.2139/ssrn.2597292

John (Xuefeng) Jiang (Contact Author)

Michigan State University ( email )

632 Bogue St Ste N505
Eli Broad College of Business
East Lansing, MI 48824
United States
517-432-3031 (Phone)
517-432-1101 (Fax)

HOME PAGE: http://sites.google.com/view/johnjiang

John R. Robinson

Texas A&M University ( email )

mail stop 4353
Mays School of Business
college state, TX 77843-4353
United States
979-845-3457 (Phone)
979-845-0028 (Fax)

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

Maobin Wang

University of International Business and Economics - School of Banking and Finance ( email )

Beijing, 100029
China

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