Impact of Tax Advisers and Corrupt Tax Auditors on Taxpayer Compliance
Bibliographic record
Abstract
Using two experiments, this study examines taxpayers' decisions on how much income to report in the presence of tax auditors and post-reporting tax advisers, respectively. In the first experiment, we examine taxpayers' compliance in the presence and absence of corrupt auditors. In the second experiment, we examine taxpayers' compliance in the presence of corrupt tax auditors and compare it with their compliance in the presence of tax advisers retained by the taxpayers upon being audited. The bribes sought by corrupt auditors from audited taxpayers are expressed in the form of a percentage of taxes and penalties payable. The sequence of events in the first experiment is as follows: (1) the taxpayer decides what percentage of income to report to the tax authority; (2) the taxpayer finds out whether or not he or she is audited; and (3) the taxpayer pays any unpaid taxes and penalties if audited by a non-corrupt auditor, or decides whether to pay a bribe if the auditor is corrupt. In the second experiment, step 3 is replaced by the taxpayer having to decide whether to bribe the corrupt tax auditor without hiring a tax adviser, or to retain a (dispute resolution) tax adviser in the absence of a corrupt tax auditor to contest the penalties and underreporting of income. Participants' learning from earlier rounds of the experiment can affect their reporting choice in subsequent rounds. The results of our first experiment show that overall taxpayer compliance is reduced in the mere presence of a corrupt tax auditor, even when bribe-seeking may offer no net after-tax monetary benefits to the taxpayers. This demonstrates the corrosive effects of corrupt auditors. Taxpayer compliance declines even further when taxpayers receive net monetary benefits from bribing the corrupt auditor. The second experiment examines whether the involvement of a professional tax adviser increases or decreases the percentage of income reported compared to the baseline compliance in the presence of a corrupt tax auditor. If the tax adviser serves as a gatekeeper and moral authority, the percentage of income reported by the taxpayer client could increase in the presence of a tax adviser. However, if the tax adviser effectively serves to simply override the tax penalties imposed on the taxpayer, the percentage of income reported by the taxpayer client could decrease. Our experimental results show that in the absence of corrupt auditors, tax advisers are better at improving taxpayer compliance compared to the baseline compliance in the presence of a collusively corrupt tax auditor. This suggests that tax advisers do serve as moral gatekeepers for the tax system.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.000 | 0.005 |
| Meta-epidemiology (narrow) | 0.000 | 0.001 |
| Meta-epidemiology (broad) | 0.001 | 0.000 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.001 | 0.000 |
| Scholarly communication | 0.000 | 0.001 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.001 |
| Insufficient payload (model declined to judge) | 0.001 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".