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How choice architecture can promote and undermine tax compliance: Testing the effects of prepopulated tax returns and accuracy confirmation

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  • van Dijk, Wilco W.
  • Goslinga, Sjoerd
  • Terwel, Bart W.
  • van Dijk, Eric

Abstract

We tested the effects of prepopulated returns and accuracy confirmation on compliance. Participants were asked to report correct liabilities for different types of returns, whereby some had to confirm the accuracy of each reported liability and others not. Results showed that correctly prefilled returns yielded the highest rate of compliance, followed by returns that were not prefilled, followed by returns that overestimated liabilities, and with returns that underestimated liabilities displaying the lowest compliance. Moreover, accuracy confirmation increased compliance only for returns that overestimated liabilities. The present study indicates that both morality and defaults play a pivotal role in shaping the effects of prepopulated returns on compliance. Our findings imply that prepopulating tax returns should be done with care, because it can increase tax compliance when done correctly, but undermine it when done incorrectly.

Suggested Citation

  • van Dijk, Wilco W. & Goslinga, Sjoerd & Terwel, Bart W. & van Dijk, Eric, 2020. "How choice architecture can promote and undermine tax compliance: Testing the effects of prepopulated tax returns and accuracy confirmation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    • Handle: RePEc:eee:soceco:v:87:y:2020:i:c:s2214804320301208
    DOI: 10.1016/j.socec.2020.101574
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    References listed on IDEAS

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    Cited by:

    1. Ho Fai Chan & Uwe Dulleck & Jonas Fooken & Naomi Moy & Benno Torgler, 2023. "Cash and the Hidden Economy: Experimental Evidence on Fighting Tax Evasion in Small Business Transactions," Journal of Business Ethics, Springer, vol. 185(1), pages 89-114, June.
    2. Christiansen, Tobias Gabel, 2024. "Dynamic effects of tax audits and the role of intentions," Journal of Public Economics, Elsevier, vol. 234(C).
    3. Akın, Zafer, 2023. "Direct lying or playing the victim? An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 150-169.
    4. William G. Morrison & Bradley J. Ruffle, 2020. "Insurable losses, pre-filled claims forms and honesty in reporting," Working Paper series 20-18, Rimini Centre for Economic Analysis.
    5. Siamand Hesami & Hatice Jenkins & Glenn P. Jenkins, 2024. "Digital Transformation of Tax Administration and Compliance: A Systematic Literature Review on E-Invoicing and Prefilled Returns," Development Discussion Papers 2023-14, JDI Executive Programs.
    6. Akin, Zafer, 2022. "Playing the victim behavior: an experimental study," MPRA Paper 115532, University Library of Munich, Germany.

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