Using Top-Down Compliance Gap Techniques to Supplement the Compliance Risk Management Framework
Technical Notes and Manuals, January 24, 2025
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Bibliographic details
- Authors: Elena D'Agosto, Michael A Hardy, Stefano Pisani, Anthony Siouclis
- Published: January 24, 2025
- Series: Technical Notes and Manuals
- DOI: https://doi.org/10.5089/9798400291555.005
Summary of core findings
- Traditional top-down tax gap assessments identify the size of a tax gap, but not its origins.
- Extracting more granular information from top-down tax gap assessments and combining this information with Compliance Risk Management (CRM) techniques enables:
- improved accuracy of CRM techniques;
- improved consistency of the likelihood and consequence dimensions of compliance risk assessments;
- identification of emerging areas of tax compliance risk;
- better disaggregation of the direct and indirect revenue effects of compliance interventions, including the “behavioral component” within the indirect effects.
- It is possible to determine the optimal revenue recovery from each segment of the taxpayer population by integrating granular top-down gap information with CRM techniques.
Analytical approach and techniques
- Use of top-down tax gap assessments as a data source for CRM, extracting more granular information than conventional aggregate gap estimates.
- Combining top-down gap-derived indicators with CRM frameworks to refine both likelihood and consequence scoring in risk assessments.
- Disaggregation methods to separate direct revenue effects from indirect effects, with explicit identification of a “behavioral component” within indirect effects.
Implications for compliance risk management and tax administration
- CRM frameworks can achieve greater internal consistency in risk scoring by anchoring likelihood and consequence dimensions to empirically derived top-down gap information.
- Early detection of emerging compliance risks is facilitated by more granular top-down indicators, allowing proactive allocation of compliance resources.
- Better attribution of revenue impacts (direct vs. indirect) supports clearer evaluation of compliance interventions and more targeted policy design.
- Segment-level analysis enables estimation of optimal revenue recovery strategies tailored to taxpayer cohorts.
Practical recommendations for practitioners
- Supplement traditional CRM inputs with granular outputs from top-down tax gap assessments to refine risk prioritization.
- Integrate methods to disaggregate indirect revenue effects and explicitly measure the taxpayer behavioral component when evaluating compliance interventions.
- Use segment-level gap information to design and prioritize interventions aimed at maximizing revenue recovery across taxpayer populations.
- Ensure CRM likelihood and consequence dimensions are calibrated against empirical top-down gap indicators to improve assessment consistency.
Key publication metadata (excerpt)
- Pages: 28
- Series: Technical Notes and Manuals No. 2025/003
- Issue: 003
- Volume: 2025
- DOI: https://doi.org/10.5089/9798400291555.005
- ISBN: 9798400291555
Elena D'Agosto, Michael A Hardy, Stefano Pisani, and Anthony Siouclis. "Using Top-Down Compliance Gap Techniques to Supplement the Compliance Risk Management Framework", Technical Notes and Manuals 2025, 003 (2025).
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- Using Top-Down Compliance Gap Techniques to Supplement the Compliance Risk-Management Framework