Sidebar Publishes Response to Revealing Choices: Using Taxpayer Choice to Target Tax Enforcement

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Columbia Law Review‘s Sidebar is pleased to announce the publication of a response to Revealing Choices: Using Taxpayer Choice to Target Tax Enforcement by Alex Raskolnikov.

In his article, Professor Raskolnikov argues that the current tax enforcement regime could better take account of differing taxpayer motivations if it were replaced with two regimes: a “deterrence regime,” similar to the current regime but with higher penalties, and a “compliance regime,” which would feature lower penalties but would include procedural mechanisms, such as a pro-government presumption in litigation and a requirement to submit to binding arbitration, which would tend to resolve disputes in the government’s favor. Raskolnikov argues that requiring a choice between these two regimes would serve to separate those taxpayers who seek to game the system from those who do not, so that enforcement mechanisms could be targeted appropriately, leading ultimately to gains in compliance and efficiency.

In his response, Professor Lawrence Zelenak argues that recently enacted reporting and disclosure requirements aimed at tax shelters already serve to separate gamers from the majority of taxpayers. Professor Zelenak suggests that the current regime may be preferable to Raskolnikov’s proposal because it addresses the most important category of gamers (users of tax shelters) without forcing some taxpayers into a deterrence regime, because it is more equitable to improve compliance by increasing the probability of detection rather than by increasing penalties, and because a pro-government presumption and a requirement of binding arbitration represent a drastic and possibly detrimental change in the current regime as applied to the ordinary taxpayer.

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