Kathleen DeLaney Thomas, Presumptive Collection: A Prospect Theory Approach to Increasing Small Business Tax Compliance, 67 Tax L. Rev. __ (forthcoming 2013), available at SSRN.
In Presumptive Collection: A Prospect Theory Approach to Increasing Small Business Tax Compliance, Kathleen DeLaney Thomas tackles the extensive, and notoriously difficult to address, problem of small business tax evasion. She does so by proposing a novel solution to the problem: presumptive collection of tax liability. Her solution is elegant, balanced, and a great example of how tax law professors can integrate scholarship from other disciplines with their detailed knowledge about tax law and compliance, in order to produce valuable real-world proposals.
Thomas starts off by detailing some of the well-known facts about the rampant tax evasion by small businesses. These businesses, which have high opportunities to evade as a result of the lack of withholding and information reporting, engage in great amounts of evasion. As a result, they are major contributors to the so called “tax gap,” and their evasion threatens the integrity of the tax system. Continue reading "Presumptive Collection: An Innovative Proposal for a Notoriously Difficult Problem"