HOLLAND - 'Tis the season when millions of Americans are making work of dutifully completing and sending in their tax returns.

A Hope College professor has been studying those who don't.

Dr. Christina Ritsema, assistant professor of accounting, is co-author of a study that examines what motivates those who do not file tax returns. The study, she noted, is the only one of its kind ever done, since she and the others on her team took the unique step of asking members of the population why.

"This is the only data set in the country that's like that," she said. "What it does is shed a little light in a very dark hole of non-compliant taxpayers, because it's the only survey that's been done."

It's a dark hole, and also a deep one. According to Ritsema, each year an estimated nine million taxpayers who are required to file a federal return fail to do so, resulting in an estimated $24.3 billion in unreported and unpaid tax. She noted that the overall federal tax gap - the difference between the amount of tax owed and the amount collected - is nearly $300 billion each year.

Given how much is at stake, the research, "Attracting Nonfilers Through Amnesty Programs: Internal Versus External Motivation," is receiving attention. On Friday-Saturday, March 4-5, Ritsema and co-researchers Tracy Manly of the University of Tulsa and Deborah Thomas of the University of Arkansas presented their work during the 11th Annual Tax Research Conference of the Journal of the American Taxation Association in Washington, D.C. In addition, Ritsema, Thomas and Gary D. Ferrier of the University of Arkansas had written another paper on tax compliance that they presented during a research conference sponsored by the Internal Revenue Service in June of 2003.

The survey was conducted in Arkansas in 1997, when Ritsema was a doctoral student at the University of Arkansas. The state of Arkansas had instituted a state tax penalty amnesty that year, and provided an opportunity to survey those who responded. The participants were people who had filed a federal return but had failed to file a state return.

What makes the data different, Ritsema said, is that the survey considers the participants' reasons for coming forward and why they had failed to file.

"The goal was to understand the non-compliant population, and why they became compliant in the amnesty in the hope of reducing the tax gap," she said. "This study basically showed that you cannot consider tax return behavior without considering behavioral variables."

The researchers found that the participants fell into one of three general categories in choosing to participate: external motivation, mixed motivation and internal motivation.

For the most part, those in the "external" category had been unaware that they had been required to file a state return, and when they received the state's letter about the program were prompted to action. The amnesty itself wasn't a powerful motivator for them. They tended to have higher income, and to be married.

The members of the "internal" group participated in the program without receiving any communication from the state. They generally knew that they owed money, but had lacked the resources to pay at the time the return was due. They responded independently to the opportunity to pay their past-due tax without penalty. Their income was lower, and most were single.

Those in the "mixed" group received the letter, but had also known that they had owed tax. The letter helped motivate them, but they reported that they may have chosen to participate in the amnesty program anyway. Although their income was generally higher than in the "internal" group, they also reported lack of funding as a primary reason for their prior failure to file.

Consistently, the researchers found, the participants felt that they had a moral obligation as well as a legal obligation to pay.

"Everybody agreed it was the right thing, but they weren't sure how to do the right thing," she said. "Some knew it was the right thing but forgot. The others knew but didn't have the means to pay."

Given the survey results, Ritsema said, it seems clear that additional education - building awareness of state tax requirements - would have prompted many to have filed. In addition, with lack of resources having been a major consideration for many of those surveyed, better publicizing tax payment options could encourage many of the others.

"Since they said it was the morally right thing to do, we can alleviate their guilt and get them on the system," she said.

She also noted that the research is a beginning, since much remains unknown about nonfilers. The team's survey doesn't include, for example, those who chose not to come forward at all despite the amnesty. "It would be interesting to know whether these taxpayers do indeed owe Arkansas tax and, if so, their motivation for continuing to avoid their state tax liability," she said.

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