CPA Attested Tax Returns and Tax Evasion

For a considerable number of years, business income tax returns attested by a certified public accountant (CPA) have enjoyed special tax incentives. There has, however, been no documentary evidence to justify the existing tax incentive policy. This study, which uses a Tobit model to undertake an analysis of business income tax return data, empirically demonstrates that CPA attested tax returns are more compliant with the tax law than non-attested tax returns. This finding suggests that tax authorities should continue to promote the use of CPA attested tax returns. As well, this finding recommends the auditing of a greater proportion of non-attested returns in order to reduce the incidence of tax evasion.