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Tag Archive for Tax Amnesty

An Analysis Of Tax Settlement Programs As Amnesties – Why IRS’s Offshore Voluntary Disclosure Settlement Programs Posed Risks To Voluntary Compliance (Part 2 of 3)

In last week’s blog, we discussed how broad amnesties can blunt economic deterrence, but narrow amnesties or amnesty alternatives (e.g., amnesties that forgive only penalties before noncompliance is detected) do not necessarily have the same negative effects. We also cited research suggesting that those who participate in amnesties also tend to be people who made inadvertent errors (i.e., “benign” actors, rather than bad actors). Furthermore, without an amnesty, a sudden increase in penalties or enforcement is more likely to be viewed as unfair and erode trust for the government – a view that can erode voluntary compliance. Read more

Analysis Of Tax Settlement Programs As Amnesties (Part 1 of 3)

On March 13, 2018, the IRS announced that on September 28, 2018, it would end the offshore voluntary disclosure program (OVDP), as it had only attracted 600 applicants in 2017. So now is a good time to take a step back to review the program in the broader context of the research on tax amnesties.

Settlement programs and other voluntary disclosure or correction programs generally offer some form of amnesty. Offering broad tax amnesties on a regular basis, as many states do, can erode voluntary compliance. Read more