Taxpayer disclosure and penalty laws

Paul J. Beck, Jon S. Davis, Woon Oh Jung

Research output: Contribution to journalArticlepeer-review


The consequences of a penalty exemption available to U.S. taxpayers who disclose aggressive reporting positions is examined via a game theoretic model. Results indicate that (i) the tax agency's expected revenue collections (net of audit costs) decline under the disclosure exemption, and (ii) the impact of disclosure regulations depends on the taxpayer's type. Of particular interest, we find that taxpayers who are likely to prevail on an uncertain issue decrease their expected payments although they do not disclose in equilibrium. The impact on the amount of resources absorbed by the tax collection process is also examined.

Original languageEnglish (US)
Pages (from-to)243-272
Number of pages30
JournalJournal of Public Economic Theory
Issue number2
StatePublished - 2000

ASJC Scopus subject areas

  • Finance
  • Sociology and Political Science
  • Economics and Econometrics


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