Big data analytics could be a panacea for the IRS by enabling creation of taxpayer profiles to better capture noncompliance using artificial intelligence and machine learning, requiring fewer costly manpower hours.  Privacy, fair information practices, and embedded biases are critiques of such practices, and it is unknown how taxpayers will respond.  Deterrence theory suggests improved audit effectiveness will increase compliance but excludes elements of tax morale, including perceived fairness.  We find evidence supporting a moderated mediation model where procedural fairness mediates the relationship between audit procedures and tax compliance, moderated by participatory monitoring, which captures how effects vary when taxpayers willingly increase traceability of their income by advertising online.  When taxpayers advertise business online, use of advanced technologies in audit selection significantly increases compliance with no significant effect on perceived fairness; when they do not, use of advanced technologies has no effect on compliance, but significantly decreases perceived fairness.

Coca-Cola is one of the most recognized brands in the world. The multinational corporation, based in Atlanta, Georgia, has subsidiaries around the globe. In 2021, Coca-Cola lost a $3 billion lawsuit in Tax Court related to transfer pricing and its syrup subsidiaries. This case study examines the issue of transfer pricing for use in Advanced Accounting and Advanced Tax courses. It can also be used to apply ethical frameworks to accounting decisions. After completing this case, students will be able to explain why companies and tax jurisdictions care about transfer pricing, the alternatives available for setting transfer prices, and the importance of tax planning for multinational corporations. Students can also evaluate the ethical considerations associated with shifting profits to low-tax jurisdictions.

The Internal Revenue Service (IRS) is charged with enforcing the U.S. tax code and has historically fulfilled this charge efficiently. The IRS is among the most cost-effective government agencies, costing just 33 cents for each $100 it collects (Internal Revenue Service (IRS) 2021a). The effectiveness of the agency is associated with factors like a relatively high voluntary compliance rate and the use of technology to improve audits and enhance taxpayer service. Technology-supported audits have dual roles; they increase perceived detection, which deters noncompliance, and they increase actual detection, which identifies noncompliers; both roles help to improve revenue collection. Technology-supported taxpayer service increases the cost-efficiency of the agency and taxpayer satisfaction. This study provides a historical overview of the computerization of the IRS, noting obstacles, like budget constraints, politicization of the agency, historically short leadership tenure, risks associated with private-sector contracts, and taxpayer privacy concerns.