SYNOPSIS
We predict taxpayers who use tax software developed by tax authorities will be more compliant than those who use commercial tax software. Experiment 1 indicates that taxpayers who are shown by prior literature to be aggressive (those in a tax-due position) report less aggressively when they utilize tax software developed by the taxing authorities, compared to a commercial software package. Using tax software developed by tax authorities minimizes the difference in aggressiveness between taxpayers in a tax-due position and those in a refund position, mitigating the effects found in prior research. Results from Experiment 2 suggest that the identity of the software developer is key; placement of a tax authority logo on commercial software does not create the same effect. Experiment 2 also provides evidence that taxpayers assume a greater detection risk when using authority-developed software, accounting for some change in behavior. The results of this paper have implications for researchers, taxpayers, and policy makers.
