סמינר במימון חשבונאות

  Israel Klein,  Hebrew University In Jerusalem

The American taxpayer, whether a publicly-traded 100 billion dollar corporation or a single-mother working part-time, is legally required

to self-assess their tax liability and then send a tax return along with a check to the IRS. While acting as an agent of the government for

the purpose of assessing and collecting taxes, the taxpayer can engage in opportunistic reporting which, although not necessarily in conformity

with the tax code, is expected to result in a tax savings since in all likelihood, the submitted return will not be audited.

By investigating opportunistic reporting and the factors bringing it about, this article presents some novel findings with respect to the tremendous cost in lost tax revenues when tax

is collected through self-reporting, and the means available for reducing the cost of using taxpayers as collection agents.

Opportunistic reporting leads to more than $20 billion in lost tax revenues every year. Nevertheless, popular tax parameters prevalent in regulatory discourse and legal

research do not convey information about these practices, hence opportunistic reporting and the circumstances allowing it are left obscure and

unaddressed by the legal system.

Novel empirical analysis of alternative tax parameters reveals that R&D expenses are prominent factors in generating

opportunistic reporting. Thus, the remedy suggested by the article—using insights from agency theory—is to allow companies to report such expenses

in tax returns only if these same expenses  are recognized and reported as R&D expenses in all other company financial statements – those furnished

to other stakeholders, such as investors, creditors and regulators.