Taxes -- Who Cheats?

There may be a selection effect here.

Who files by paper? People with simple tax returns -- people who do their own taxes because they have a T4 and perhaps a few charity receipts and RRSP deductions.

They don't cheat in part because they can't.

People who use tax preparers and/or file electronically are more likely to have businesses and cash income and are in a position the cheat if so inclined. I doubt the form of filing leads to cheating -- it is the person who cheats.


People who file taxes electronically more likely to cheat: report

OTTAWA - Canadians who file their income-tax returns electronically are more likely to cheat, a newly released report suggests.

An internal analysis by the Canada Revenue Agency found that individuals who sent their tax returns through the Internet - the so-called Netfile option heavily promoted by Ottawa - were more likely to understate the amount of taxes owed.

The "program analysis estimates the non-compliance rate to be higher on Netfile returns vs. the other filing methods," says the internal report from last September.

The department analyzed random returns from the 2005 taxation year, which were filed in 2006, estimating that about 15 per cent of returns were non-compliant. That translated to about $569 million in taxes owed but not declared.

Full story here:

http://ca.news.yahoo.com/s/capress/080810/national/tax_cheats