THE EFFECT OF AUDIT RATES ON THE FEDERAL INDIVIDUAL INCOME TAX, 1977-1986

This paper analyzes empirically the effects of audit rates and certain other factors on the filing of federal individual income tax returns and the self-reporting of taxes due. Using data drawn from the Annual Report of the Commissioner of Internal Revenue and the Statistics of Income for the years 1977-86, we estimate that self-reported taxes in 1986 would have been greater by approximately fifteen billion dollars had the federal audit rate remained constant at its 1977 level during the intervening period.

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