The Minnesota Income Tax Compliance Experiment--State Tax Results

Posted: 12 Nov 1996

See all articles by Stephen Coleman

Stephen Coleman

Metropolitan State University (retired)

Multiple version iconThere are 2 versions of this paper

Date Written: April 1996

Abstract

This report describes the Minnesota Income Tax Compliance Experiment conducted by the Minnesota Department of Revenue in 1995. The experiment tested alternate strategies to improve voluntary compliance with the state's individual income tax. These strategies included: increased examination and auditing of returns with prior notice to taxpayers, enhanced services to taxpayers, information messages about tax compliance in two letters sent to taxpayers, and a redesigned state M-1 tax form. About 47,000 taxpayers participated in the experiment. They were selected by random chance for the compliance strategies. The primary measures used to evaluate compliance strategies were change in reported federal taxable income and change in state taxes paid from tax year 1993 to 1994. Changes in groups subject to a compliance strategy were compared to changes in similar groups of taxpayers who were unaffected by the experiment (control groups). Analysis of the results identified the strategies that had the greatest effect on changing taxpayers' behavior and the specific types of taxpayers who were most strongly affected. This experiment received the 1996 Research Award from the Federation of Tax Administrators.

JEL Classification: D6, D7, H2, H26, C93, C4, C23

Suggested Citation

Coleman, Stephen, The Minnesota Income Tax Compliance Experiment--State Tax Results (April 1996). Available at SSRN: https://ssrn.com/abstract=4419

Stephen Coleman (Contact Author)

Metropolitan State University (retired) ( email )

St. Paul, MN 55108
United States

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