Enhanced Enforcement Outcomes Through a Responsive Regulation Approach to Sales Tax Enforcement

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Journal of Public Budgeting, Accounting, and Financial Management




In this study, targeted interventions were applied in a natural quasi-experimental setting to taxpayers engaged in sales tax theft and evasion to gauge both the direct and indirect impacts of a responsive regulation approach to compliance enforcement. The approach adopted included substantial engagement with targeted businesses and deferral of more punishing forms of deterrence based on the target's level of cooperation and effort to return to and maintain compliance. Results were was found to be 2.17:1. Additionally, the impact of the targeted responsive regulation interventions greatly exceeded the results obtained in deterrence-only control groups in terms of tax assessments compared to multiple control groups to determine the indirect impact of the interventions and to compare the responsive regulation approach to traditional deterrence-only enforcement results. The indirect versus direct impact of the targeted responsive regulation enforcement regimen overall and assessment per dollar of cost ($322.19 vs. $5.21).