The prospects of taxpayer agreement with aggressive tax advice

This study examines the extent to which taxpayers agree with aggressive tax advice under a variety of conditions. It extends prior taxpayer aggressiveness research by applying prospect theory and the theory of regulation. The study reports the results of an experiment that uses a nationwide, random...

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Bibliographic Details
Published in:Journal of economic psychology 2001-04, Vol.22 (2), p.157-172
Main Author: Schmidt, Dennis R.
Format: Article
Language:English
Subjects:
Advertising. Marketing. Consume behavior
Applied psychology
Attitudes
Biological and medical sciences
Compliance
CPAs
Economic psychology
Economic sociology
Economic theory
Fiscal policy
Fundamental and applied biological sciences. Psychology
Government policy making
Law enforcement
Policy making
Prepayments
Prospect theory
Psychology. Psychoanalysis. Psychiatry
Psychology. Psychophysiology
Regulation
Risk
Statistical analysis
Studies
Tax compliance
Taxation
Taxes
Taxpayers
Theory of regulation
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Summary:This study examines the extent to which taxpayers agree with aggressive tax advice under a variety of conditions. It extends prior taxpayer aggressiveness research by applying prospect theory and the theory of regulation. The study reports the results of an experiment that uses a nationwide, random sample of US taxpayers as subjects. The subjects read a scenario that involves an ambiguous tax situation in which their professional tax preparer advises an aggressive position. The subjects then state the degree to which they agree with the aggressive advice. The experiment manipulates prepayment position (refund vs. balance-due) and preparer type (certified public accountant [CPA] vs. non-CPA) between subjects. The results, after controlling for economic sanctions and risk propensity, show that taxpayers are more likely to agree with aggressive advice when they are in a balance-due prepayment position and when they use CPAs as preparers. The study has implications for tax policy makers and enforcement agencies.
ISSN:0167-4870
1872-7719
DOI:10.1016/S0167-4870(01)00027-7