Taxpayer audits are thought to have a direct deterrent effect on the individuals actually audited. In addition, audits are believed to have an indirect deterrent effect on individuals not audited as these individuals learn (or are told) about the audits of other taxpayers. However, the effects on compliance of the ways in which taxpayers learn about - and communicate among themselves - audit rates are not known. In this study, we use laboratory experiments to examine the effects of three types of information and communication on compliance. In all sessions, each subject knows the probability of audit and the results of their own audit (if any). In our base case session, each subject knows only the result of his or her audit, and subjects receive no information about audit results of other subjects. In a second treatment (termed "official" communication), subjects are also told by the experimenter the actual number of audits conducted during a period. In a third treatment (or "unofficial" communication), subjects are offered the opportunity to send a "message" to the other participants about their audit experience. Our preliminary results indicate that "unofficial" communication has a strong indirect effect that increases compliance, but that "official" communication may not encourage voluntary compliance
