Working Paper: NBER ID: w29029
Authors: Paul R. Organ; Alex Ruda; Joel Slemrod; Alex Turk
Abstract: Penalties for tax evasion are typically financial, but many jurisdictions also utilize collateral sanctions that deny access to some government-provided service. To learn about the effectiveness of such penalties, we examine a U.S. policy restricting passport access for taxpayers with substantial tax debt, known as “certification.” We find an immediate and strong positive effect on compliance actions when a passport request is denied. We then take advantage of randomization during the policy rollout to identify the direct compliance effect of certification, and find smaller but non-trivial effects whose heterogeneity is consistent with measures of taxpayers’ value of having a passport.
Keywords: tax compliance; collateral sanctions; IRS; passport certification; tax debt
JEL Codes: H2; H24; H26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Notification of certification (Y20) | Increased compliance actions (G18) |
| Denial of passport applications (K37) | Increased compliance actions (G18) |
| Denial of passport applications (K37) | Increased tax payments (H29) |
| Denial of passport applications (K37) | Entering into installment agreements (Y20) |