TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, September 7, 2018

Weekly SSRN Tax Review And Roundup: Mazur Reviews Lederman's Does Enforcement Reduce Voluntary Tax Compliance?

This week, Orly Mazur (SMU) reviews a new work by Leandra Lederman (Indiana), Does Enforcement Reduce Voluntary Tax Compliance?, 2018 BYU L. Rev. ___ (2018).

Mazur (2017-2)Does tax enforcement reduce voluntary tax compliance by taxpayers? The answer to this question can have significant implications for tax compliance efforts by the IRS and other tax administrations. Recently, a number of scholars have argued that the answer to this question is yes – that tax enforcement and deterrence negatively affect tax compliance by “crowding out” preexisting intrinsic motivations to comply with the tax laws. However, Leandra Lederman’s new work provides compelling evidence to the contrary. Relying on empirical literature, Lederman’s article challenges this assertion and concludes that tax enforcement does not reduce voluntary tax compliance. In fact, enforcement generally fosters tax compliance.

The work begins by explaining the crowding-out theory and its potential application in several non-tax contexts. Although some existing literature predicts that rewards or punishment can, in some cases, reduce intrinsic motivation to engage in a desired behavior, Lederman determines that it is hard to draw firm conclusions from existing studies and, ultimately, these results are not directly helpful in answering the question of whether enforcement reduces voluntary compliance in the tax context.

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September 7, 2018 in Orly Mazur, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (1)

Friday, May 25, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Ring's Silos And First Movers In The Sharing Economy

This week, Orly Mazur (SMU) reviews a new work by Diane M. Ring (Boston College), Silos and First Movers in the Sharing Economy Debates.

Mazur (2017-2)Should the workers who make up the sharing economy be classified as employees or independent contractors? This question, which has significant legal ramifications for gig economy workers, has been extensively debated by policymakers, academics, litigators, legislators, business operators, and regulators, among many others. In her new work, Diane Ring brings a new perspective to the debate. She convincingly argues that the worker classification debates are often incomplete due to silos among legal experts. In the sharing economy, the detrimental effects of these legal silos are compounded by first-mover actions, which together create the risk that the outcomes of the worker classification debates have unintended and undesirable collateral effects. 

As Ring explains, when answering the question of how sharing economy workers should be classified, legal experts often focus on the implications of each classification arising from their area of the law or “legal silo,” without a full understanding of the effects of that outcome in other legal contexts. But resolution of this worker classification issue in one legal context is likely to affect a worker’s legal implications in another context. 

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May 25, 2018 in Orly Mazur, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Friday, April 13, 2018

Weekly SSRN Tax Article Review And Roundup: Mazur Reviews Morse's Government-To-Robot Enforcement

This week, Orly Mazur (SMU) reviews a new work by Susan C. Morse (Texas), Government-To-Robot Enforcement, 2018 U. Ill. L. Rev. ___.

Mazur (2017-2)As Tax Day approaches, millions of people are using tax software, such as TurboTax, to prepare their tax returns. But what if you make a legal error on your tax return as a result of the tax preparation software? Under current law, the legal liability for the error is directly on you - the taxpayer.

In her new work, Susan Morse proposes to fundamentally change the way regulatory law is enforced. She proposes government-to-robot enforcement. Specifically, Morse argues that an automated law system, which is any machine that produces a legal determination, should be held directly liable for compliance errors made by its users. Therefore, if you use TurboTax to prepare your taxes and you correctly input your facts, but the system produces a return that understates your tax liability, you would not be directly liable for this error. Instead, if the error is discovered, the IRS would pursue enforcement against and impose liabilities directly on TurboTax.

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April 13, 2018 in Orly Mazur, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tuesday, March 6, 2018

60 Tax Profs File Amicus Brief Urging Supreme Court To Overrule Quill v. North Dakota

Sixty tax law professors and economists filed an amicus brief at the Supreme Court Monday urging the Justices to overrule the Dormant Commerce Clause holding of Quill Corp. v. North Dakota, 504 U.S. 298 (1992), which bars states from enforcing sales taxes against retailers who lack a "physical presence" in the state. From the brief:

In Quill Corp. v. North Dakota, the Court emphasized that its dormant Commerce Clause analysis was based on “structural concerns about the effect of state regulation on the national economy.” 504 U.S. 298, 312 (1992). The Court was especially concerned about the effect of taxation on the mail-order industry, and it believed that maintaining the physical presence rule would “foster[] investment by businesses and individuals.” Id. at 315-18. It also believed that its rule would reduce compliance costs for businesses and individuals engaged in commerce across state lines. See id. at 313 n.6. For those reasons, the Court reaffirmed the physical presence rule first announced in National Bellas Hess, Inc. v. Department of Revenue of Illinois, 386 U.S. 753 (1967).

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March 6, 2018 in Ari Glogower, Daniel Hemel, David Gamage, David Herzig, Erin Scharff, New Cases, Orly Mazur, Sloan Speck, Tax Profs | Permalink | Comments (3)