INCREASING TAX COMPLIANCE IN WASHINGTON STATE: A FIELD EXPERIMENT

TLDR

The study evaluates a field experiment in Washington State aimed at increasing use tax and B&O tax compliance. The Department of Revenue mailed letters to taxpayers that heightened perceived detection risk and penalty awareness, but the study did not assess subsequent year effects. The enforcement strategy improved use tax compliance in the same period, while B&O tax compliance remained unchanged.

Abstract

This paper reports the results of a field experiment conducted in Washington State to improve compliance with the use tax and the Business and Occupation (B&O) tax. As part of the program, the Department of Revenue mailed letters that enhanced perceived detection risk and/or raised penalty awareness. Results indicated that the enforcement strategy produced a same-period improvement in use tax compliance. Subsequent year effects were not examined. Compliance with the B&O tax was unaffected.