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Tax Compliance and Perceptions of the Risks of Detection and Criminal Prosecution

Published online by Cambridge University Press:  01 July 2024

Steven Klepper  and
Daniel Nagin
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Abstract

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In this paper we use a survey concerning a hypothetical taxpayer to analyze how certain features of the enforcement of the tax laws shape perceptions of the risks of detection and penalties for tax noncompliance. We also examine the effects of these perceptions on intended noncompliance behavior. Our findings provide strong support for various hypotheses concerning the effect of the enforcement process on perceptions. We also find, in contrast to prior results, that the perceived risk of criminal prosecution appears to act as a powerful deterrent to noncompliance. We explain why earlier studies might have failed to detect a deterrent role for the severity of punishment.

Type
Research Article
Information
Law & Society Review , Volume 23 , Issue 2 , 1989 , pp. 209 - 240
Copyright
Copyright © 1989 The Law and Society Association.

Footnotes

This material is based upon work supported by the National Science Foundation and the Internal Revenue Service under Grant No. SES 8709573. We thank Kristin Johnston for her research assistance and Shari Diamond, Harold Grasmick, Ray Paternoster, John Scholz, Ann Witte, and two anonymous referees for their helpful comments.

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