June 26, 2006
Junior Scholars Workshop: Susan Morse, The How and Why of the New Public Corporate Tax Compliance Norm
Posted by Christine Hurt

Good morning, and welcome to the third paper in the Second Annual Conglomerate Junior Scholars Workshop.  Today's presenter is Susan Morse, a Teaching Fellow at Santa Clara University School of Law.  This morning, we will have expert commentary on Susan's paper, The How and Why of the New Public Corporate Tax Compliance Norm in the form of separate posts after this one.  This post will float at the top, and readers are invited and encouraged to read some combination of the paper, the abstract and the commentary and respond in the comment section of this post; Comments will not be open on the individual commentators' posts in an effort to contain all comments in one convenient section of the blog.  I look forward to the discussion!

The Glom views this workshop as a virtual version of an academic conference.  Therefore, any anonymous comments will be deleted.  As with a conference environment, if you have comments you would prefer to mention to the presenter in person, feel free to email Susan privately.  The abstract for the paper follows:

This paper examines the recent shift toward a stronger federal income tax compliance norm at public corporations, as evidenced by practitioner and government comments and survey results. The apparent demise of mass-marketed corporate tax shelters presents the clearest example of this new norm. The paper focuses on the organizational behavior of tax decisionmakers within public corporations as they respond to Sarbanes-Oxley, enforcement initiatives, and tax shelter regulation. The paper identifies three elements that have contributed to the development of a stronger tax compliance norm. First, Sarbanes-Oxley has resulted in the expansion and increased transparency of public corporation tax decisionmaking groups. Organizational behavior insights suggest that this should produce more considered decisions. Second, civil and criminal enforcement has resulted in real concerns about personal and firm liability among organization leaders. This causes organization hierarchies to encourage and reward compliance. Third, the government has clearly identified objectionable tax shelter transactions and plainly labeled them unacceptable and even fraudulent. In the tax shelter area, this substantially reduces the ethical or legal uncertainty that otherwise presents an obstacle to the development of compliance norms in organizations. The paper identifies elements of this story that do not fit neatly under the classic economic analysis of tax avoidance or evasion, including the importance of enforcement outside the tax context and the particular power of clear government rules. The conclusion also discusses what the government might do, in light of the organizational behavior influences identified by the paper, to preserve and expand the new public corporation tax compliance norm.

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