Contemptuous Positions

The reliance on self-reporting techniques in the collection of income taxes requires taxpayers to self-assess their tax liability and self-report it to the tax authority (which might or might not audit the report). Acting as agents of the government for the purpose of assessing and collecting taxes, taxpayers can engage in contemptuous reporting which involves knowingly reporting tax positions that do not conform to the tax code. Nonetheless, such reporting is expected to result in a tax savings since in all likelihood the submitted return will not be audited. Although believed to be endorsed by all taxpayers, this article mainly focuses on the use of contemptuous tax positions by corporations. Findings in regard to publicly traded companies indicate a tremendous loss of tax revenues resulting from contemptuous tax reporting by corporations; nevertheless, popular tax parameters prevalent in regulatory discourse and legal research of corporate tax behavior do not convey information about these positions. Hence their reporting and the circumstances allowing it are left unaddressed by the legal system.