Amnesties, Settlements and Optimal Tax Enforcement

Posted: 22 Jun 2000

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This paper develops a model of tax enforcement in which the tax agency has discretionary power to make pre-audit settlement offers. Settlement can take the form either of general amnesties or of individual deals. It is shown that pre-audit settlements allow the agency to overcome its limited control over the enforcement parameters (the agency takes the tax and penalty levels as given) and to increase net revenue. Amnesties prove to be superior to individual deals since they allow the agency not only to extract from taxpayers their defence cost, but also to reduce an excessive tax differential.

JEL Classification: I26, K42

Suggested Citation

Franzoni, Luigi Alberto, Amnesties, Settlements and Optimal Tax Enforcement. Available at SSRN:

Luigi Alberto Franzoni (Contact Author)

University of Bologna ( email )

P.zza Scaravilli 2
Bologna, 40124
0512098488 (Phone)
+39-051-221968 (Fax)


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