Workplace Transformation and Its Tax Compliance Implications

Abstract

Due to technological advances and the COVID-19 pandemic, taxpayers are increasingly utilizing their homes as a focal point from which to conduct their business affairs. On the one hand, the nation should applaud this workplace transformation insofar as it may enhance job performance and efficiency, reduce product cost and overhead, and improve work–life balance. On the other hand, this transformation process may open the door to rampant tax abuse as taxpayers alone or in collusion with their employers seek to transform home usage into a tax shelter refuge.This analysis delves directly into the income tax compliance concerns that the workplace transformation engenders. It does so by exposing the nature of the problem, its prevalence, what it might cost the nation annually in terms of lost revenue, and why current safeguards are failing to achieve their sought-after objectives. The good news is that if Congress proactively takes immediate remedial measures to address this nascent problem, such actions could help foster taxpayer compliance, defend the income tax base, and halt the depletion of the nation’s revenue coffers. However, if Congress dallies and is derelict in fulfilling its oversight duties, this problem is poised to go from bad to worse.