The Justice Department tends to tout its successful prosecutions of tax fraud cases right before April 15 each year, according to a new study set to be published in the Virginia Tax Review.
For the study, Joshua D. Blank of New York University School of Law and Daniel Z. Levin of Rutgers Business School analyzed 782 news releases issued by the Department of Justice Tax Division from 2003 through 2009, in which the DOJ announced a civil or criminal tax enforcement action against a taxpayer.
The study, first reported by The New York Times’ Economix blog, found that DOJ disproportionately issued tax enforcement news releases during the weeks immediately prior to Tax Day — the April 15 deadline day for the filing of most individual tax returns — compared to the rest of the year. According to the authors, the spike is likely by design:
By presenting individual taxpayers with vivid examples in which the I.R.S. has detected tax fraud — whether it involves a popular celebrity’s phony business deductions, a high-profile banker’s offshore bank account or a local tire salesman’s underreporting of gross income — the government may provide an individual taxpayer with available images that showcase the I.R.S.’s detection capabilities. Because the government consistently provides more of these images to individual taxpayers during the weeks leading up to Tax Day than it does during other times of the year, individual taxpayers may draw upon these available images as they teeter on the decision to claim questionable tax positions on their annual individual tax returns.
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