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Statute of Limitations for Tax Evasion

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  • Raluca Pavel
  • Bernur Acikgoz
  • Jean‐Christophe Poudou
  • Marc Willinger

Abstract

We investigate the effects of retroactive audits and varying statutes of limitations on tax compliance through a laboratory experiment. First, we solve a dynamic model using Bellman's solution to show that longer limitation periods promote compliance by raising expected penalties, as each past period carries a higher probability of inspection. Second, in our experiment, we manipulate the statute of limitations (0, 1, 3, and 6 periods), providing data that support the model's predictions. Our data also suggest that a 3‐year statute of limitation optimally balances compliance benefits with administrative efficiency.

Suggested Citation

  • Raluca Pavel & Bernur Acikgoz & Jean‐Christophe Poudou & Marc Willinger, 2025. "Statute of Limitations for Tax Evasion," Kyklos, Wiley Blackwell, vol. 78(2), pages 729-745, May.
    • Handle: RePEc:bla:kyklos:v:78:y:2025:i:2:p:729-745
    DOI: 10.1111/kykl.12440
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