A Structural Equation Model for Tax Compliance and Auditing

Abstract

In this paper, we estieate a three equation sodel for taxpayers' reported incoce and tax liability and for the probability of an audit. Our work differs f roe previous studies in that our dependent variables in the coepliance equations are taxpayer reports rather than a variable related to auditor estisates of noncoepliance and in that we esticate a structural equation for audits.