One of the Internal Revenue Services’ methods for audit is to pick individuals engaged in transactions with other taxpayers whose tax returns were selected for audit. This group accountability (GA) in the audit mechanism introduces an externality where one’s action affects the likelihood of others being audited. It can induce a different tax compliance behavior compared to the individual accountability (IA) audit mechanism, where an individual is selected randomly for audit. We study the effectiveness of GA against IA treatment using a lab experiment, and find that GA treatment increases the mean tax compliance by 6.6 pp (intensive margin) and full tax compliance rate by 12.7 pp (extensive margin). We also report how this impact changes as we vary the audit rate, group size and degree of anonymity among group members.