Working Paper: NBER ID: w24366
Authors: Niels Johannesen; Patrick Langetieg; Daniel Reck; Max Risch; Joel Slemrod
Abstract: In 2008, the IRS initiated efforts to curb the use of offshore accounts to evade taxes. This paper uses administrative microdata to examine the impact of the enforcement efforts on taxpayers’ reporting of offshore accounts and income. Enforcement caused approximately 60,000 individuals to disclose offshore accounts with a combined value of around $120 billion. Most disclosures happened outside offshore voluntary disclosure programs by individuals who never admitted prior noncompliance. The disclosed accounts were concentrated in countries whose institutions facilitate tax evasion. The enforcement-driven disclosures increased annual reported capital income by $2.5-$4 billion corresponding to $0.7-$1.0 billion in additional tax revenue.
Keywords: Tax compliance; Offshore accounts; Enforcement initiatives; IRS; Foreign assets
JEL Codes: H24; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Enforcement initiatives (K42) | Disclosure of offshore accounts (H26) |
| Disclosure of offshore accounts (H26) | Increase in annual reported capital income (D33) |
| Increase in annual reported capital income (D33) | Additional tax revenue (H29) |
| Enforcement initiatives (K42) | Increase in reported income (E25) |