AN EXAMINATION OF TAX PRACTITIONER DECISIONS - THE ROLE OF PREPARER SANCTIONS AND FRAMING EFFECTS ASSOCIATED WITH CLIENT CONDITION

Tax practitioners play an important role in the voluntary compliance s ystem. Not only do professionally prepared returns account for a signi ficant percentage of the tax returns filed in the U.S., but empirical evidence suggests that practitioners help taxpayers lower their tax li abilities by taking advantage of ambiguous features of the tax law. Th is study investigates whether selected factors influence the decisions made by professional tax preparers. The subjects include 107 experien ced tax practitioners who are certified public accountants. The result s reflect that there is a significantly greater likelihood that the ta x practitioners would sign tax returns containing a large deduction as sociated with an ambiguous tax issue if (1) the signing decision is ma de in relation to an existing client (a loss decision frame in the con text of the study) or (2) tax preparer penalties are communicated with high enforcement intent.