Year of Publication

2006

Document Type

Dissertation

College

Business and Economics

Department

Business Administration

First Advisor

Cynthia Vines

Abstract

The purpose of this dissertation is to resolve an apparent conflict between the services that tax preparers provide and the tax preparation services taxpayers seek. Some literature demonstrates that tax professionals equate client advocacy with taking aggressive tax positions and minimizing taxes. Other literature suggests taxpayers seek to increase accuracy and reduce the probability of tax audit when they hire a tax professional. This difference is an "expectation gap."The methodology employed to examine this issue is a survey of tax professionals at various levels of expertise. This survey asks tax preparers what they believe motivates their clients to seek professional tax preparation services. It also asks how aggressive a tax professional should be in minimizing clients' taxes. A similar survey sent to taxpayers who use the services of a tax preparer asked the same questions about taxpayers' primary motivation in seeking professional tax preparation services and then about how they believe their tax preparer would answer the questions about aggressive tax reporting.This dissertation extends the research in several ways. In previous studies, taxpayer motivation has been determined by using a simple checklist or an open-ended question. Instead of using these approaches, I developed a scale using methods that rigorously test for validity. In measuring client advocacy, I use a scale that has been recently developed and used in the literature. While previous research has shown the disparity between what tax professionals provide and what taxpayers want, no study has asked each group how they believe the other group will respond. This will provide a measure of the degree of understanding each group has of the other.This research show that there is an expectation gap between taxpayers and their tax preparers at all levels, and that this gap is statistically significant. However, the actual size of the gap is small; accuracy and client advocacy have the largest gaps. Additional findings are that timesavings is more important to taxpayers with children, that contact with the IRS is correlated with a lower desire to avoid it, and that lower tax knowledge is correlated with stronger desire for an accurate return.

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