A generally accepted finding from prior research is that in compliance decision contexts tax preparers exploit ambiguity in tax rules to help clients reach favorable reporting positions. Using an experiment with then Big 6 partners, senior managers and managers as subjects, this study accomplishes three objectives. First, by directly manipulating the level of ambiguity within a single tax scenario, this study confirms the result that tax professionals interpret ambiguity to the benefit of clients in compliance decision contexts. Second, this study provides initial evidence that decision context affects the way professionals interpret ambiguity. Specifically, the results suggest that tax professionals interpret ambiguity aggressively in compliance contexts, but relatively conservatively in planning decision contexts. Finally, this study provides evidence that tax professionals exploit precise tax rules to achieve client‐preferred outcomes in planning decision contexts. These findings provide insights useful for understanding tax professionals' judgments and have potential tax policy implications.
Tax Professionals' Interpretations of Ambiguity in Compliance and Planning Decision Contexts
Brian C. Spilker, Ronald G. Worsham, Douglas F. Prawitt; Tax Professionals' Interpretations of Ambiguity in Compliance and Planning Decision Contexts. Journal of the American Taxation Association 1 September 1999; 21 (2): 75–89. https://doi.org/10.2308/jata.19188.8.131.52
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