Mark P. Gergen,
Uncertainty and Tax Enforcement: A Case for Moderate Fault-Based Penalties, 64
Tax L. Rev.
Available at: http://scholarship.law.berkeley.edu/facpubs/1315
The article discusses conventional wisdom which is considered as a deterrence theory of tax compliance which indicates penalties for tax under-reporting. It notes the penalty rate and a model of a deduction item of uncertain value to extend the point to valuation and examines the risk created by the interaction of a penalty multiplier on the outcome of audit. It explains how the bimodality of outcomes on most legal questions alters the impact of a penalty.