Framing Tax Audit Risks: The Role of Temporal Framing and Perceived Fairness

Abstract

In this study, we examine the role of temporal framing in the context of tax audit risk. Using construal-level theory, we propose that compared with an every-year frame (e.g., 1.5 million returns are audited every year), framing audit risk in an everyday frame (e.g., 4,000 returns are audited every day) will make audit risk seem more likely and thus increase taxpayer compliance. We test whether perceived fairness of the tax system, an individual difference variable related to tax compliance, moderates the effect of temporal framing on behavioral intentions. The results show that communicating risk in a day frame rather than a year frame increases compliance for taxpayers who perceive the tax system as unfair but not for taxpayers who perceive the tax system as fair. Increasing compliance among taxpayers who perceive the tax system as unfair is crucial, as they are less likely to be compliant. Thus, framing audit risk can assist in increasing taxpayer compliance.

Citation

Comunale, C.L., Barragato, C.A. and Buhrau, D. (2019), "Framing Tax Audit Risks: The Role of Temporal Framing and Perceived Fairness", Advances in Accounting Behavioral Research (Advances in Accounting Behavioural Research, Vol. 22), Emerald Publishing Limited, Leeds, pp. 1-19. https://doi.org/10.1108/S1475-148820190000022002