Responsive Regulation and Tax Investigations: The Tax Investigation Diamond Model Assumptions

Abstract

This is an exploratory study to analyse whether the Tax Investigation Diamond (TID) model is a necessary and useful tool for tax investigations. The TID meant to have a special role within tax compliance as an alternative strategy mechanism to maximise the likelihood of restoration by the offender. Through an analysis of interviews of Portuguese Tax Inspectors, we show that in tax investigations it is not always desirable to fulfil all steps of escalation. This study provides data that indicates that TID can be an innovative strategy for adapting responsive regulation strategies to tax investigations, based on the tax inspector’s perception of the taxpayer’s motivational posture and the way in which power actions are used according to these motivational postures.