Tax Enforcement and the Intended and Unintended Consequences of Information Disclosure

57 Pages Posted: 1 Jun 2020 Last revised: 20 Jul 2020

See all articles by Laura Konda

Laura Konda

U.S. Department of the Treasury

Elena Patel

University of Utah - Department of Finance

Nathan Seegert

University of Utah - Department of Finance

Date Written: May 4, 2020

Abstract

We quantify the intended and unintended consequences to firms of increasing tax information disclosure to the IRS. Our empirical strategy leverages an exogenously staggered adoption of a redesigned tax form. We find that the redesign was successful at increasing compliance after 2011 among some firms, the intended consequence. At the same time, we find that firms changed their reporting in a way that decreased expected tax liability, an unintended consequence. We estimate that this unintended behavior reduced corporate receipts by $1.3 billion.

Keywords: Business Tax, Information Disclosure, Tax Enforcement

JEL Classification: H25, H26, M4, K2

Suggested Citation

Konda, Laura and Patel, Elena and Seegert, Nathan, Tax Enforcement and the Intended and Unintended Consequences of Information Disclosure (May 4, 2020). Available at SSRN: https://ssrn.com/abstract=3592114 or http://dx.doi.org/10.2139/ssrn.3592114

Laura Konda

U.S. Department of the Treasury ( email )

1500 Pennsylvania Avenue
Washington, DC 20220
United States

Elena Patel (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

Nathan Seegert

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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