Taxes

Cheat on taxes? Never! (Really)

March 3, 2014 at 10:07 AM ET

We may grouse — a lot — about paying our taxes, but when push comes to shove most people think cheating on your taxes is not OK.

Really.

The IRS Oversight Board’s annual taxpayer survey finds that 86 percent of Americans thinks it’s not at all acceptable to cheat on taxes. Most people surveyed also said they generally agreed that everyone who cheats should be held accountable.

What’s more, the vast majority of Americans — 95 percent — mostly or completely agree it’s every American’s civic duty to pay taxes.

It’s not just a fear of getting caught that motivates people to be honest. More than nine in 10 of the people surveyed said personal integrity influences whether they honestly report and pay their taxes. By contrast, just six in 10 said fear of an audit influenced their tax compliance.

Americans’ attitudes about whether it’s OK to fudge their taxes have actually stayed pretty steady over the years. That’s despite the common complaints we hear about our notoriously confusing tax system.

Experts say that may be because people have conflicting impulses when it comes to taxes.

”People may say that they believe in compliance, but that doesn’t mean that they do it,” said Stuart Green, a law professor at Rutgers School of Law who has studied white-collar crime.

People also may have differing views of what actually constitutes a tax cheat. Our modern tax system includes so many tax breaks, loopholes and other quirks that Green said it can seem like a difficult line between tax evasion — actively cheating on your taxes — versus tax avoidance.

“Tax avoidance is what we pay our accountants all that money to do for us,” Green said. “No one thinks there’s anything wrong with that.”

A more telling statistic, he noted, may be how many people the IRS considers to be actual tax cheats.

In the 2006 tax year, the most recent data available, the IRS estimates that about 83 percent of taxpayers paid their taxes accurately and on time. Among the remaining approximately 17 percent, the IRS reports that the most common offense was under-reporting income, followed by not filing taxes and underpaying taxes.

After collecting late payments and other enforcement action, the IRS estimated that for the 2006 tax year, it still never collected $385 billion that was due to the government, from individuals and businesses.

The taxpayer attitude survey was conducted last August by outside polling firm GfK Custom Research. The pollsters do not say at the beginning of the survey that it is being conducted on behalf of the IRS Oversight Board, but after respondents have answered all the questions it does indicate that the survey is related to the IRS.

The nine-member oversight board was created by Congress to oversee the IRS.

Allison Linn is a reporter at CNBC. Follow her on Twitter @allisondlinn or send her an e-mail.

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