Who’s calling? The effect of phone calls and personal interaction on tax compliance

Abstract

Most tax agencies use letters as the method of communicating with taxpayers. Still, other technologies exist that could be more effective. This paper reports the results of a field experiment conducted by the National Tax Agency of Colombia (DIAN), using phone calls to reduce tax delinquencies. DIAN randomly assigned 34,000 tax debtors to a phone call operation using a fixed script to communicate existing debts and invite taxpayers to a meeting at the local tax agency office. Phone calls were very effective to increase collection of unpaid taxes. Conditional on the phone call being made, the effect on the treatment is about 25 percentage points higher than the control group (about a fivefold increase). We also find suggestive evidence that the personal interaction seems to be an important channel for explaining taxpayers’ behavior. Faced with a tax agent, taxpayers tend to commit to attending the meeting and paying the tax owed. However, many taxpayers who commit do not make payment effective. The findings complement a nascent literature that shows that there are plenty of gains from innovating in the communication strategy. They also indicate that personal interactions are important, but they have to be paired with easy-to-follow and immediate actions. Paying taxes is easier said than done.

Does the frequency of reminders matter for their effectiveness? A randomized controlled trial

“…Second, the paper also adds to the literature that studies the impact of notifications sent by tax authorities on tax compliance (Mascagni, 2018;Antinyan and Asatryan, 2020;Slemrod, 2019). To this date various aspects of the notifications have been manipulated, such as the delivery method (e.g., Doerrenberg and Schmitz, 2017;Mogollón et al, 2021;Ortega and Scartascini, 2020), the content and the framing of the notification (e.g., Hallsworth et al, 2017;Hernandez et al, 2017;Bott et al, 2019;De Neve et al, 2019), and the timing of the communication (e.g., Gillitzer and Sinning, 2020). To the best of our knowledge, the impact of notification frequency on tax compliance is understudied so far.…”