OUR THOUGHTS ON:

IRS Survey on Tax Cheating

Tax

By Ron Kramer


Each year (since 2002), the Internal Revenue Service Oversight Board conducts an annual Taxpayer Attitude Survey to gain an understanding of taxpayers’ attitudes toward tax compliance and IRS service and activities. The results of the 2009 Survey were released on February 16, 2010.

The 2009 Taxpayer Attitude Survey reveals that U.S. taxpayers find it more acceptable to cheat on their income tax returns in 2009 than they did a year ago. For instance, when asked how much, if any, do you think is an acceptable amount to cheat on your income tax, 9% of taxpayer’s responded “a little” for 2009 as compared to 6% in 2008. 4% of those polled in 2009 endorsed cheating “as much as possible” as compared to only 3% in 2008. Thus, the overall percentage of taxpayers who find it acceptable to cheat increased from 9% in 2008 to 13% in 2009. Also, the percentage of taxpayers who said that cheating was “not at all” acceptable fell from 89% in 2008 to 84% in 2009.

Some of the other attitudes revealed in the Survey are interesting. Taxpayers who say they completely agree with the following statements declined in each case:

Comment  

'09

 

'08

It is every American's civic duty to pay their fair share of taxes   70%   72%
Everyone who cheats on their taxes should be held accountable   63%   67%
It is everyone's personal responsibility to report anyone who cheats on their taxes   28%   31%

The responses to these questions suggest that taxpayers appear to be more tolerant of tax cheats in 2009 versus 2008.

The Survey also inquired as to how much influence certain factors had on taxpayers as to whether they report and pay their taxes honestly. Eighty-one percent (81%) surveyed said that their personal integrity had a great deal of influence over their honest reporting of taxes, the same as in 2008. The percentage that indicated fear of an audit as a great influence increased from 36% to 39% in 2009.

The IRS Oversight Board also reported that the 2009 Survey showed overwhelming support for imposing competency and ethical standards on tax return preparers. In the 2009 survey, 78% of those surveyed indicate that it is “very important” that return preparers meet standards of “ethical behavior”, while 73% believe it is very important that tax preparers meet competency standards. In January 2010, the IRS announced plans to regulate tax return preparers through competency examination and continuing education requirements. CPAs in good standing with their licensing agencies and who remain current with the continuing education requirements of those agencies would be exempt from most of the proposed regulation requirements.

Summary

The IRS Oversight Board concludes that the 2009 Taxpayer Attitude Survey identifies “some softening” in taxpayers’ views on cheating. Is this “softening” a result of the bad economic conditions in the country, or is it the cumulative effect of the examples set by high profile U.S. government officials taking or staying in office despite accusations or evidence of personal tax cheating? Is the attitude: if they do it and get away with it, how bad could it be? Fortunately, according to the Survey, personal integrity still influences about 92% of Americans to honestly report and pay their taxes.

Schneider Downs provides accounting,tax, wealth management and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA, and Columbus, OH.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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