Premium
The Effect of Practitioner Recommendations on the Tax Judgments of Small Business Owners and Managers *
Author(s) -
HITE PEGGY A.,
STOCK TOBY
Publication year - 1995
Publication title -
law and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.534
H-Index - 45
eISSN - 1467-9930
pISSN - 0265-8240
DOI - 10.1111/j.1467-9930.1995.tb00143.x
Subject(s) - taxpayer , ex ante , business , marketing , actuarial science , psychology , accounting , economics , macroeconomics
This study addresses conflicting results between prior research documenting a client demand for aggressive practitioner‐prepared returns and research establishing taxpayer preferences for accurate returns and cautious reporting behavior. Rather than rely on practitioner reports of client aggressiveness, the tax reporting preferences of clients are examined in afield experiment mailed to small businesses across the country. After subjects had indicated ex ante beliefs about the likelihood of independent contractor status, they significantly altered their behavioral intentions in the direction of a preparer's recommendation. This implies that prior results with practitioner samples may have been biased by the practitioners' personal views. Nonetheless, some aggressive subjects were not as willing to follow the preparer's advice as were the conservative subjects. Evidence is presented on variables that correlate with aggressive tax decision making .