Encouraging Taxpayers to Do the Right Thing: A Focus on Trust and Cooperation (Abstract)

Professor Leslie Book; Villanova University Law School; Pennsylvania, United States

This article builds off of prior research looking at the IRS’s administration of refundable credits and the earned income tax credit in particular. In prior work, I have argued that the IRS needs to supplement its current focus on tax return characteristics in identifying potentially erroneous returns and take an active and engaged interest and understanding taxpayer characteristics. Research and insights from other tax administrators suggest that cooperation and compliance follow when an agency enhances its legitimacy in its interactions with taxpayers. By emphasizing and enhancing the legitimate exercise of power and minimizing policies that taxpayers are likely to view and experience as coercive, it may be possible for the government to influence additional taxpayers to voluntarily comply in the first instance. Whether taxpayers will view an agency’s actions as legitimate or coercive requires as a starting point an appreciation of any compliance policy through the eyes of the taxpayer. Using that starting point, this essay considers recent legislative changes meant to enhance EITC program integrity and current administrative proposals to develop a real-time communication platform with taxpayers.  It also suggests that the IRS and Congress should measure IRS actions and proposals in light of their actual and potential impact on essential taxpayer rights with an eye toward improving the conditions that will create greater trust in and respect for the IRS.