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NCJ Number: 76834 Find in a Library
Title: Measuring White Collar Crime - The Use of the 'Random Investigation' Method for Estimating Tax Offenses
Author(s): S B Long
Corporate Author: Bureau of Social Science Research, Inc
United States of America

Princeton University
Dept of Statistics
United States of America
Date Published: 1980
Page Count: 24
Sponsoring Agency: Bureau of Social Science Research, Inc
Washington, DC 20036
National Institute of Justice/
Rockville, MD 20849
National Science Foundation
Arlington, VA 22230
Princeton University
Princeton, NJ 08540
US Dept of Justice
Washington, DC 20531
Grant Number: 78-NI-AX-0132; 79-NI-AX-0007; SOC-7825039
Publication Number: BSSR. No. 0583-04
Sale Source: National Institute of Justice/
NCJRS paper reproduction
Box 6000, Dept F
Rockville, MD 20849
United States of America
Document: PDF
Type: Report (Study/Research)
Language: English
Country: United States of America
Annotation: Because the frequency and nature of white-collar crimes cannot be measured by victim reports, an alternative approach termed the 'random investigation' method is examined as applied to Federal income tax violations.
Abstract: Enforcement records cannot provide an accurate estimate of crime rates since they also reflect agency resources and priorities. Investigating random samples of persons is an alternative approach which has been used by the Internal Revenue Service (IRS) since its 1948 Audit Control Program. The Taxpayer Compliance Measurement Program (TCMP) established in 1962 expanded the use of this technique, and over 20 TCMP studies have been conducted on different tax areas and years. This paper examined the longest time series of the TCMP surveys which covered the 1963, 1965, 1969, and 1973 tax years and the following types of noncompliance: proportion of returns with tax underreporting errors, the average net tax underreported, and the proportion of total tax liability this underreporting represented. Adjusted TCMP indexes showed that the average amount of tax underreported remained roughly unchanged -- $152 in 1963 and $146 in 1973 -- but the overall underreporting rate increased 40 percent over the 10-year period. Referrals for potential criminal tax evasions were similar throughout the time period and were estimated to average 20 per 10,000 returns. Based on IRS auditing procedures, this would probably translate into 1 to 2 criminal convictions for every 10,000 returns. These data do not include criminal nonfilers or corporate tax offenses. Rates estimated for civil fraud averaged 9 per 10,000, while rates for negligence violations were 123 per 10,000. The low incidence of civil fraud suggests weakness in the TCMP survey design. A vast increase in the audit staff, however, would be required to process additional fraud referrals. In addition, individuals receiving income from business, farm, or a profession had violation rates 5 to 9 times higher than wage earners or salaried individuals. These findings illustrate the potential uses and versatility of the random investigation method, but more research is needed to determine what other types of offenses it is suited to measure. Tables and 9 references are included.
Index Term(s): Crime rate studies; Drug offenders; Internal Revenue Service; Tax evasion; White collar crime
Note: Paper to be presented before the 1980 Annual Meeting of the American Society of Criminology, San Francisco, California, November 5-8, 1980.
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