<p>This study examines whether taxpayers intentionally avoid IRS third-party
reports. In 2017 an IRS amendment created an exogenous shock that impacted how
third parties report gambling winnings to the IRS. In thoroughbred racing, this
shock had a substantial impact on certain types of wagers. This paper considers
how gamblers reallocated their money following the shock. Using a
difference-in-differences research design that compares U.S. tracks to Canadian
tracks, I find that gamblers increased their investment in wager types that had
become less likely to trigger third-party reports by 27 percent. In the U.S.,
over $400 billion in tax revenue goes uncollected annually, largely due to
unreported income. Third-party IRS reporting is considered the most effective
way to reduce underreporting, but there is limited understanding of how
taxpayers interact with third-party reporting rules. This paper provides
evidence on this interaction, showing that taxpayers purposefully avoid
third-party reports to facilitate tax evasion.</p>
| Identifer | oai:union.ndltd.org:purdue.edu/oai:figshare.com:article/13236929 |
| Date | 16 December 2020 |
| Creators | Victor Charles Ferguson (9641120) |
| Source Sets | Purdue University |
| Detected Language | English |
| Type | Text, Thesis |
| Rights | CC BY 4.0 |
| Relation | https://figshare.com/articles/thesis/GAMING_THE_IRS_S_THIRD-PARTY_REPORTING_SYSTEM_EVIDENCE_FROM_PARI-MUTUEL_WAGERING/13236929 |
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