Why are men with abused wives good cases for a tax compliance study?

There may be a variety of reasons for a man to abuse his wife (please ask men for this!!!). One of them could be the aggressive nature of men. By abusing their wives who are the most intimate and perhaps the most loyal people to them, men may fulfil their eagerness of power and control without being punished (if their wives keep silent).  Their aggressiveness can also be penetrated into their attitudes towards the government in general or towards the legal system and tax enforcement in particular. Therefore, men who abuse their wives are highly likely the ones who circumvent their tax liabilities and refuse to pay back tax owned and penalties if get caught. Thus, they are good cases to study the factors affecting taxpayers’ compliance behaviour.

3-paper Lit Review - focusing on theorisation and unif of analysis

Paper title: The role of client advocacy in the development of tax professionals’ advice

From Donna D. Bobek, Amy M. Hageman, and Richard C. Hatfield

Research question: how can client advocacy be at least partially context-specific and how does it influence tax professionals’ judgment and decision-making process.

Research method: experiment where all participants are experienced tax professionals.

Data: individual tax professionals’ responses to measures of general advocacy, client-specific advocacy, decision process (consisting of perceived likelihood of legal challenge and weightings of the relevance of the pertinent treasure regulatory governance), and decision outcomes (consisting of recommendation in terms of viewing the ambiguous activity more like a hobby or a business, and allowance of tax treatment of the activity)

Theories used to develop hypotheses

Theory:

Advocacy is normally conceptualised as an attitude which, if related to a particular behaviour, is shaped by an individual’s beliefs about the potential consequences of the behaviour (Roberts 1998, Mason & Levy 2001, Ajzen & Fishbein 1980).

Application / Hypothesis development:

Tax professionals’ client advocacy is an attitude

The particular behaviour is being an advocate of their clients

è Client advocacy is expected to change based on the outcomes associated with behaving as the advocate of a particular client

è The relation between client-specific advocacy and tax professionals’ judgment and decision-making processes is expected to be stronger than when the advocacy is measured at a general level.

My comments

Overall, since the question research looks at individual attitude and judgment and decision-making processes and outcomes, and the data are measures of individual attitudes and judgment and decision-making processes and outcomes, a reconciliation of unit of analysis does not seem to be a concern in this study. (Thus, the theory does not play the bridging role here)

However, my concern centres at the measure of tax professionals’ judgment and decision-making processes. At the first glance, the two measures of the process, which are perceived likelihood of legal challenge and weightings of the relevance of the pertinent treasure regulatory governance, respectively, seem to be appropriate as both the likelihood and the weightings affect the decision-making outcome. However, one may also argue that these two measures are also ‘outcomes’ in the sense that they result from some complex and perhaps iterative thinking process. Such thinking process, nevertheless, cannot be directly measured. It is only possible to understand it if interviews are conduced where tax professionals can express or describe how they make judgment and decisions.

Paper title: The impact of tax professionals upon the compliance behaviour of Australian individual taxpayers

From Ken Devos

Research question: Is there a relationship between the tax professionals’ advice and individual taxpayers’ compliance behaviour

Research method: survey where there are two groups of participants: evaders and non-evaders; compare the answers (frequencies and percentages) to the survey question between the two groups; employ chi-square statistical test to investigate the relationship between tax professionals’ advice and individual taxpayers’ compliance behaviour

Data: Participants response to questions designed on a five-point Likert scale. Four of the total thirty questions relates to tax professionals, including the likelihood of agreeing with a conservative (aggressive) advice from the tax agent and the likelihood of retaining the tax agent who gives conservative (aggressive) advice. There are also other questions regarding the participants’ demographic profile and their primary reason for engaging a tax agent etc.

Hypotheses:

H1: there is a relationship between the reasons taxpayers engage tax professionals and their compliance behaviour

H2: there is a relationship between taxpayers’ preference for aggressive or conservative tax advice from their tax professionals when faced with ambiguous tax law and their compliance behaviour

H3: there is a relationship between taxpayers retaining/terminating their client/advisor relationship based on the tax advice they receive from their tax professionals and their own compliance behaviour

My comments:

No specific theory is used to develop the above hypotheses. Since the author looks at tax professionals’ advice and individual taxpayers’ compliance behaviour, and the data collected indeed measures what they are supposed to measure, unit of analysis seems to be matched.

However, from my perspective, the author simply distinguishes taxpayers who are compliant from those who are not. The extent of non-compliance is not reflected. I suspect that the relationship between non-compliance behaviour and tax professionals’ advice may be moderated by the degree of non-compliance (e.g. the dollar amount involved, the severity of tax law violations etc.). But to be realistic, it seems that the degree of non-compliance can never be (reliably) measured as the tax office may not be allowed to give the information and taxpayers may not correctly state their non-compliance if asked to do so. Thus, it may be a good idea to attempt to quantify non-compliance, it is almost impossible to do it in practice.

 

Paper title: Aggressive tax planning: Differentiating those playing the game from those who don’t

From Kristina Murphy

Research question: what are the factors that lead taxpayers to seek the services of an aggressive tax practitioner?

 

Research method: survey

 

Data: obtained/extracted from data from the Community Hopes, Fears and Actions Survey. Two groups of taxpayers are of interest: those who reported that they preferred a creative accountant and who actually had an aggressive tax agent; and those who did not prefer a creative accountant and did not have an aggressive tax agent. The comparison between the two groups is based on five constructs: demographic profiles, world views, motivational postures, evaluations of the ATO and the tax system, and individual experiences.

Theories and Hypotheses development:

Theory:

Kagan and Scholz’s (1984) political citizen model:

Non-compliance behaviour may result from ‘political citizens’ not persuaded that compliance is an obligation of citizenship and/or from regulators’ unreasonable behaviour.

Social networks and associations shape the formation of perceptions, norms, and attitudes.

Application:

In the context of tax, it is possible that taxpayers’ non-compliance is due to their rebellion against tax authority enforcement actions or laws perceived to be illegitimate.

Socio-psychological factors need to be taken into account when explaining taxpayers’ non-compliance behaviour

My comments:

For the five constructs, the author employed measures developed by prior researchers as proxies. With regards to unit of analysis concerns, it seems that both the theories used and the data collected are of individual’s. However, although data are obtained by surveying individual taxpayers, it is possible that the survey participants may not be the one who actually completed their individual tax self-assessment. For example, their partner may report their tax on their behalf. If that is the case, then the measured demographics, world views, and motivational postures etc. cannot represent those of the true tax reporters.

 

 

Research Proposal – The effect of the interaction between tax professionals and taxpayers on tax compliance behaviour

Break

Historically, it has been documented that when making judgment on potential legal challenges and when making recommendations in terms of giving aggressive or non-aggressive tax advice, tax professional are affected by some special attributes of their clients (taxpayers). These attributes include taxpayers’ aggressiveness (e.g. Duncan et al. 1989, Cloyd 1995, and Cuccia et al. 1995), their importance to the tax professionals (Bobek et al. 2010), and their riskiness (e.g. Bobek et al. 2010 and Fiore 1998) and so forth.

On the other hand, the impact of tax professionals’ advice on taxpayers’ compliance behaviour, although not intensively or directly examined, has been suggested in the tax compliance literature. For instance, Murphy (2003) reports that taxpayers indeed respond to campaigns advertised by their tax professionals and place trust in their tax professionals. Devos (2010) finds that compared to tax non-evaders, evaders are more likely to retain their relationship with their tax professionals who proffer aggressive advice.

Based on the above discussion, one may conclude that taxpayers can affect their tax professionals’ decision-making processes and outcomes which in turn, exert influence on taxpayers’ compliance behaviour. However, prior studies tend to ignore the fact that tax professionals do not directly affect the compliance behaviour as the ultimate decision-maker is the taxpayer himself. Tax professionals’ advice is only one of the concerns of taxpayers when deciding their own tax positions. Thus, one may expect no, or a weak relationship between tax professionals’ advice and taxpayers’ compliance behaviour.

Restructure

In the proposed research project, I argue that it is the interaction between tax professionals and taxpayers, which is dynamic and bidirectional, that helps to shape taxpayers’ compliance behaviour.

The following simple example serves to illustrate the dynamic and bidirectional interaction between tax professionals and taxpayers. Suppose there is an aggressive taxpayer who approaches a tax professional in order to more effectively minimise his tax payment. He has heard some other tax professionals promoting a particular investment scheme to save tax. However, to his surprise, his tax professional does not recommend him to do so. Therefore, it would be interesting to know first, on what basis the tax professional formed such recommendation, and second, will the taxpayer change his intention upon receiving the advice?

More specifically, for tax professionals, albeit it has been well-documented that their decision-making processes and outcomes are affected by the specific client (taxpayer), it is unclear how they weigh their clients’ intention or preference against their ethics and judgment about the probability of being caught and the subsequent penalties when making decisions. For taxpayers, it is unclear what the role of tax professionals is in their views? Are tax professionals more like a reliable information source or a tax-reducing enabler? How important are tax professionals’ advice in the mind of taxpayers, compared to their own ethics and intentions? On the one hand, taxpayers’ own ethics and tax morality may play the central role in their tax compliance decisions, hence the aggressive advice from tax professionals, even if more or less influential in the decision-making process, does  not change the ultimate outcome; and vice versa when an aggressive taxpayer encounters a  non-aggressive tax professional. On the other hand, it is also possible that tax professionals’ opinions are so essential that taxpayers may be willing to follow their suggestions, although this means giving up their original intention.

Method

Since the proposed research project is an exploratory one, semi-structured interviews will be conducted to collect information from both tax professionals and individual taxpayers who approach tax professionals for tax reporting.

Interviewees will be asked to describe their interaction or experience with their tax professionals or their clients, and how such experience affects their decision-makings. In cases where interviewees do not respond properly to the general questions, some specific questions and scenarios will be given. A list of examples of specific questions is presented in the appendix.

Appendix

For taxpayers:

About themselves

What do you think yourself as an individual taxpayer? Will you take advantage of ambiguities in tax laws to save your tax?

About tax professionals

What is the primary reason for you to engage in tax professionals? Is it because they are experts in tax and perhaps, accounting, and you think they are able to reduce your tax payment as far as the law allows? Or, you think the tax system is too complex and you want to ensure that your tax report is correctly done?

For taxpayers who self-report they are aggressive

Have you ever expressed your tax-minimising goal to your tax professional? Any example of how and when (before the tax professional make recommendations or afterwards) do you do so?

In cases where your tax professional does not recommend aggressive actions, did you try to persuade him? If so, did he follow your suggestion (i.e. he did some aggressive tax planning for you even though this was not his original thinking)?

If your tax professional does not take your suggestion even if you explicitly show your desire to reduce tax, will you terminate your client/advisor relationship and find another one who is willing to help you, or you accept your tax professional’s suggestion? If you accept his suggestion, are you still going to approach him the next time or try to find another one? What are your concerns in making this retention or termination decision?

For tax professionals:

About themselves

What do you think yourself as a tax professional? Are you more inclined to play a tax enforcer role or a tax exploiter role?

About their clients

What are the concerns you take into account when making judgment on the probability of being caught and the associated penalties?

When you make decisions regarding what type of advice you are going to proffer to your client, what is the most influential factor? Is it you weighing of the probability of being caught and penalties against potential tax savings? Or is it your clients’ desire? Or something else, such as the ethical environment of your working place?

Will you make recommendation based on how aggressive/conservative your client is? In other words, will you make aggressive advice if you see your client is keen to reduce his tax payment? Or rather, will you be more conservative in such a case?

If your professional judgment tells you that it is better to be conservative in terms of reporting tax for a particular client, but your client persuades you to be more aggressive, what will you do?

Suppose that your client terminates his relationship with you simply because you are not aggressive or conservative as he desires. Will this experience change your thinking? Will you act differently the next time when a similar client approaches you? Why?

References

Bobek D. D., Hageman A. M. & Hatfield R. C. 2010, ‘The Role of Client Advocacy in the Development of Tax Professionals’Advice’, Journal of the American Taxation Association, vol. 32, no. 1, pp.25-51.

Bobek D. D. Hageman A. M. & Radtke R. R. 2010, ‘The Ethical Environment of Tax Professionals: Partner and Non-Partner Perceptions and Experiences’, Journal of Business Ethics, vol. 92, pp. 637-654.

Cloyd C. B. 1995, ‘The effects of financial accounting conformity on recommendations of tax preparers’, The Journal of the American Taxation Association, vol. 17, issue 2, pp. 50-70.

Cuccia A. D., Hackenbrack K. & Nelson M. W. 1995, ‘The ability of professional standards to mitigate aggressive’, The Accounting Review, vol. 72, no. 2, pp. 227-248.

Devos K. 2012, ‘The impact of tax professionals upon the compliance behaviour of Australian individual taxpayers’, Revenue Law Journal, vol. 22, issue. 1, pp. 1-26.

Duncan W. A., LaRue D. W. & Reckers P. M. J 1989, ‘An empirical examination of the influence of selected economic and noneconomic variables in decision making by tax professionals’, Advances in Taxation, vol. 2, pp. 91-106.

Fiore N. 1998, ‘From the tax adviser: Minimising risks in taking on new clients’, Journal of Accountancy, vol. 185, no.2, p. 36.

Murphy K.2003, ‘Procedural justice and tax compliance’, Australian Journal of Social Issues, vol. 38, issue. 3, pp. 379-407.

Rhetorical analysis of ‘Class Reproduction in Professional Recruitment: Examining the Accounting Profession’ by Kerry Jacob

Particular, or in particular

In the first paragraph of the introduction section, the word ‘particularly’ or the phrase ‘in particularly’ are used several times. It seems to be a good way to (1) show which area the paper is going to contribute to, and (2) narrow down from the broad area to a niche and hence introduce the research topic.

Be polite and show respect to authors of prior studies

Identifying the gap in prior literature requires researchers to be critical as well as confident. The voice that ‘they are idiot’ should always jump out. However, researchers do need to show their respect to authors of prior studies (as they will also be thought as idiots by the following researchers). As reflected in Kerry’s work, one way to criticise previous works while being polite at the same time is to say something like ‘this paper extends prior studies on…’, or alternatively, to say like ‘While issues of … have been considered in the accounting literature, … (which is the topic of the paper) is relatively under-explored’ (p. 569). If got sufficient space, one can even extend the above expression into several sentences. Kerry uses ‘There has been some effort in the accounting literature to…’ to show both his politeness (p. 570). He then goes on to say ‘…the issue of …has not received the same level of attention’ (p. 570) to show his brightness.

Importantly, the aforementioned method to show both politeness and brightness also helps to signal the significance of the current study as it summaries what have been done in prior studies and articulates the gap in literature. Therefore, it suits well in the abstract, introduction and also the literature review section.

Introduce prior research works and the gap

Kerry seems be keen to use ‘historical’ to signal that he is going to talk about documented findings. For example, he writes ‘within the historical literature it is clear that…’ (p. 569), and ‘Historically it is clear that…’ (p. 570). One can then talk about what is not clear in the literature or what the difficulties are if one is going to apply the findings in literature to the settings of the current study.

Another way to introduce the gap is to say something like ‘Although / While…. (something positive), followed by a comma, and then goes on to express the main idea which is the critique of literature.