Testing the Effect of Tax Office and Client Interactions on the Meeting of Employer Obligations

The trial consists of two parts:

- Part 1: Change in internal procedures used by field auditors of the ATO. Copies of the procedures are provided in Appendix A of the analysis plan.
- Part 2: (a) Change in the script that desk auditors use for phone conversations and (b) change in the contents of a letter that desk auditors send to their clients. Phone scripts are provided in Appendix B of the analysis plan. Sample letters are included in Appendix C of the analysis plan.

The treatment effect of each intervention will be measured by comparing average outcomes between treatment and control group.

2016-02-29

2016-12-31

We will use the following outcome measures in our analysis:

1. Continuous:
- The duration of the case cycle
- The typical duration of the case cycle reported by the auditor (based on survey data, see Appendix F of the analysis plan)
- The duration until the current business activity statement (BAS) is lodged
- The amount owed by the taxpayer at the start of the case
- The amount collected during the audit
- The amount owed by the taxpayer after the case is closed (updates daily with general interest charge)
- The debt estimate raised by ATO during the audit

2. Binary:
- A variable indicating whether an activity statement has been lodged by the taxpayer during the audit
- A variable indicating the status of the BAS after the case is closed
- A variable indicating whether an arrangement has been made with the taxpayer during the audit
- A variable indicating whether the ATO lodged an overdue default assessment

3. Ordered:
- The payment conversations with my clients are easy to establish and maintain (based on survey data, see Appendix F of the analysis plan)
- The payment conversation procedures (e.g. letters sent to clients, telephone scripts, field audit guidelines) are easy for me to understand and implement (based on survey data, see Appendix F of the analysis plan)
- The payment conversation procedures (e.g. letters sent to clients, telephone scripts, field audit guidelines) are helpful in the process of obtaining payment of outstanding liabilities (based on survey data, see Appendix F of the analysis plan)
- Audit cases are referred to the Debt Business Line at an appropriate point in time, so that the chances of obtaining outstanding liabilities are maximised (based on survey data, see Appendix F of the analysis plan)
- It is easy to negotiate payment arrangements for outstanding liabilities (based on survey data, see Appendix F of the analysis plan)
- I encounter clients who are willing to pay outstanding liabilities (based on survey data, see Appendix F of the analysis plan)
- I feel rushed to finish audit cases in order to meet recommended time limits (based on survey data, see Appendix F plan)
- Negotiating payment arrangements with clients is stressful (based on survey data, see Appendix F of the analysis plan)
- I am given sufficient autonomy to make arrangements that will likely result in the payment of outstanding liabilities (based on survey data, see Appendix F of the analysis plan)

4. Survival data:
- The number of days until the current business activity statement (BAS) is lodged

Our analysis is based on four sub-samples: (A) treatment cases of field auditors, (B) control cases of field auditors, (C) treatment cases of desk auditors, and (D) control cases of desk auditors. We will compare the members of sample A to the members of sample B; the members of sample C will be compared to the members of sample D. Moreover, we will compare the members of each treatment group (A or C) to all members of the two control groups (B and D). We will estimate separate regression models for each of the four comparisons: (Case I) A vs. B, (Case II) C vs. D, (Case III) A vs. B+D, and (Case IV) C vs. B+D.

Randomization is based on a random variable generator in Stata, using a random choice of the underlying seed. A copy of the Stata code that has been written to randomly assign field and desk auditors to treatment and control groups is included in Appendix D of the analysis plan.

Intervention 1: 5 sites; 30 EO field auditors; up to 600 clients. Intervention 2: 2 sites; 12 desk auditors; up to 240 clients.

Yes

Intervention 1: 15 EO field auditors were randomly assigned to the Treatment Group; 15 EO field auditors were randomly assigned to the Control Group; it is expected that each team member will complete about 10 and no more than 20 cases.

Intervention 2: 6 EO desk auditors were randomly assigned to the Treatment Group; 6 EO desk auditors were randomly assigned to the Control Group; it is expected that each team member will complete about 10 and no more than 20 cases.

Intervention 1: 30 EO field auditors; about 300 clients. Intervention 2: 12 desk auditors; about 120 clients.

Intervention 1: Treatment Group: 15 EO field auditors; about 150 clients; Control Group: 15 EO field auditors; about 150 clients.

Intervention 2: Treatment Group: 6 EO field auditors; about 60 clients; Control Group: 6 EO field auditors; about 60 clients.

This paper presents the findings of two Randomized Controlled Trials (RCTs) that were conducted in collaboration with the Australian Taxation Office (ATO). The first trial tests the effect of changes to letters (timing, social norms, color, and provision of information about charitable donations) on response rates of businesses, the timing of payments and the amount of tax debt payments. The second trial consists of two parts. The first part aims to raise awareness of the relevance of tax debt payment by changing internal guidelines used by field auditors. The second part focuses on studying the effect of changing the phone script used by desk auditors to offer assistance with payment arrangements and simplifying a follow-up letter. The findings of the first trial indicate that none of the treatments had a significant effect on any of the outcome measures considered. In contrast, the results of the second trial indicate that changing the phone script of desk auditors and simplifying the follow-up letter reduced the proportion of default assessments raised by the ATO significantly, suggesting that businesses are responsive to certain types of nudges.

Biddle, Nicholas, Fels, Katja, and Mathias Sinning (2017): Behavioral Insights and Business Taxation: Evidence from Two Randomized Controlled Trials, Tax and Transfer Policy Institute (TTPI) Working Paper No. 2/2017, Australian National University.

https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2017-06/complete_bi_biddle-fels-sinning.pdf