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Audit lead selection and yield prediction from historical tax data using artificial neural networks
Tax audits are a crucial process adopted in all tax departments to ensure tax compliance and fairness. Traditionally, tax audit leads have been selected based on empirical rules and randomization methods, which are not adaptive, may miss major cases and can introduce bias. Here, we present an audit...
Autores principales: | , , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Public Library of Science
2022
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9710839/ https://www.ncbi.nlm.nih.gov/pubmed/36449508 http://dx.doi.org/10.1371/journal.pone.0278121 |
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author | Chan, Trevor Tan, Cheng-En Tagkopoulos, Ilias |
author_facet | Chan, Trevor Tan, Cheng-En Tagkopoulos, Ilias |
author_sort | Chan, Trevor |
collection | PubMed |
description | Tax audits are a crucial process adopted in all tax departments to ensure tax compliance and fairness. Traditionally, tax audit leads have been selected based on empirical rules and randomization methods, which are not adaptive, may miss major cases and can introduce bias. Here, we present an audit lead tool based on artificial neural networks that have been trained and evaluated on an integrated dataset of 93,413 unique tax records from 8,647 restaurant businesses over 10 years in the Northern California, provided by the California Department of Tax and Fee Administration (CDTFA). The tool achieved a 40.1% precision and 58.7% recall (F1-score of 0.42) on classifying positive audit leads, and the corresponding regressor provided estimated audit gains (MAE of $155,490). Finally, we evaluated the statistical significance of various empirical rules for use in lead selection, with two out of five being supported by the data. This work demonstrates how data can be leveraged for creating evidence-based models of audit selection and validating empirical hypotheses, resulting in higher audit yields and more fair audit selection processes. |
format | Online Article Text |
id | pubmed-9710839 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2022 |
publisher | Public Library of Science |
record_format | MEDLINE/PubMed |
spelling | pubmed-97108392022-12-01 Audit lead selection and yield prediction from historical tax data using artificial neural networks Chan, Trevor Tan, Cheng-En Tagkopoulos, Ilias PLoS One Research Article Tax audits are a crucial process adopted in all tax departments to ensure tax compliance and fairness. Traditionally, tax audit leads have been selected based on empirical rules and randomization methods, which are not adaptive, may miss major cases and can introduce bias. Here, we present an audit lead tool based on artificial neural networks that have been trained and evaluated on an integrated dataset of 93,413 unique tax records from 8,647 restaurant businesses over 10 years in the Northern California, provided by the California Department of Tax and Fee Administration (CDTFA). The tool achieved a 40.1% precision and 58.7% recall (F1-score of 0.42) on classifying positive audit leads, and the corresponding regressor provided estimated audit gains (MAE of $155,490). Finally, we evaluated the statistical significance of various empirical rules for use in lead selection, with two out of five being supported by the data. This work demonstrates how data can be leveraged for creating evidence-based models of audit selection and validating empirical hypotheses, resulting in higher audit yields and more fair audit selection processes. Public Library of Science 2022-11-30 /pmc/articles/PMC9710839/ /pubmed/36449508 http://dx.doi.org/10.1371/journal.pone.0278121 Text en © 2022 Chan et al https://creativecommons.org/licenses/by/4.0/This is an open access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. |
spellingShingle | Research Article Chan, Trevor Tan, Cheng-En Tagkopoulos, Ilias Audit lead selection and yield prediction from historical tax data using artificial neural networks |
title | Audit lead selection and yield prediction from historical tax data using artificial neural networks |
title_full | Audit lead selection and yield prediction from historical tax data using artificial neural networks |
title_fullStr | Audit lead selection and yield prediction from historical tax data using artificial neural networks |
title_full_unstemmed | Audit lead selection and yield prediction from historical tax data using artificial neural networks |
title_short | Audit lead selection and yield prediction from historical tax data using artificial neural networks |
title_sort | audit lead selection and yield prediction from historical tax data using artificial neural networks |
topic | Research Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9710839/ https://www.ncbi.nlm.nih.gov/pubmed/36449508 http://dx.doi.org/10.1371/journal.pone.0278121 |
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