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Effects of supervision on tax compliance: Evidence from a field Experiment in Austria

June 2014

Katharina Gangl, Benno Torgler, Erich Kirchler, Eva Hofmann


The study takes a random sample of 93 firms ranging in size in Austria and assigns a member of the tax collection service to make friendly monthly visits to the firms and explain that they will be making monthly audits. The tax collection members also further describe the tax laws, including potential penalties and offer a personal connection available for questions to help prepare tax statements. The study uses a control group of over 1600 firms and ultimately finds that providing close supervision of firms has a negative effect on the probability of making payments on time. The reason for this relationship was undetermined and further research is suggested.

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Policy Implications

This article can be used in trying to increase tax compliance with private firms. The surprising results suggest that regular personal contact has potentially detrimental effects. The article suggests that this could be due to a possible negative effect personal visits have on sense of autonomy or self-esteem. Additionally, the study suggests providing information over phone or email, as these may feel less infringing, however this was not tested. As a final remark the study was conducted in Austria which has different tax culture so the validity of results in the United States has the potential to differ.

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