Professor Susan C. Morse, U. Texas School of Law, has made available for download her forthcoming article, When Do Tax Compliance Robots Follow the Law, to be published in the Ohio State Technology L. J. The Abstract is as follows:
Algorithmic tax compliance robots, such as TurboTax, have long implemented the tax law using systems that make centralized legal decisions without direct user control. These robots generally follow the government’s interpretation of the substantive tax law. But they appear to break other laws, like taxpayer data protection requirements under the Free File agreement with the IRS. They also do little to encourage taxpayer honesty.
This Essay argues that market incentives explain this difference. Sometimes the market may encourage overcompliance, through risk-averse interpretations of substantive tax law. Sometimes market incentives encourage illegal actions by a tax compliance robot, as in the case of taxpayer data violations. Sometimes the market encourages undercompliance through the tacit cooperation between tax compliance robot and the user, as in the case of user fraud.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.