Do Tax Compliance Robots Follow the Law?

16 Ohio State Technology L. J. 278 (2020)

U of Texas Law, Public Law Research Paper 707

29 Pages Posted: 8 Mar 2020 Last revised: 13 May 2020

See all articles by Susan C. Morse

Susan C. Morse

University of Texas at Austin - School of Law

Date Written: February 13, 2020

Abstract

Do automated or artificial intelligence systems follow the law? What design choices can the law make to encourage legal compliance by robots? Tax law has some experience with these questions.

Algorithmic tax compliance robots, such as TurboTax or H&R Block Online, appear to break taxpayer data law, and they do not systematically encourage taxpayer honesty. On the other hand, they appear to interpret substantive tax law conservatively, in a way that minimizes audit risk. Market incentives produce these results, since tax compliance robots generally have not been charged with direct liability for legal violations. Legal design responses require nuance and variation in order to fit the diversity of outcomes produced by such robots’ operation in their markets.

Keywords: Tax compliance, TurboTax, data, taxpayer confidentiality, overcompliance, undercompliance, tax compliance robot

JEL Classification: K34, K42, K23, H26

Suggested Citation

Morse, Susan C., Do Tax Compliance Robots Follow the Law? (February 13, 2020). 16 Ohio State Technology L. J. 278 (2020), U of Texas Law, Public Law Research Paper 707, Available at SSRN: https://ssrn.com/abstract=3537679

Susan C. Morse (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

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