Faculty Publications

Title

The prospects of taxpayer agreement with aggressive tax advice

Document Type

Article

Keywords

2900, 4200, 4270, D81, Government policy making, H26, K34, K42, Law enforcement, Prospect theory, Tax compliance, Taxation, Theory of regulation

Journal/Book/Conference Title

Journal of Economic Psychology

Volume

22

Issue

2

First Page

157

Last Page

172

Abstract

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. © 2001 Elsevier Science B.V.

Original Publication Date

4-1-2001

DOI of published version

10.1016/S0167-4870(01)00027-7

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