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Book part
Publication date: 18 November 2014

Carol M. Fischer, Timothy J. Rupert and Martha L. Wartick

Examine tax-related decisions of married couples to determine whether decisions are made jointly or if one spouse dominates the decision. We also examine characteristics…

Abstract

Purpose

Examine tax-related decisions of married couples to determine whether decisions are made jointly or if one spouse dominates the decision. We also examine characteristics related to decision styles.

Methodology/approach

Questionnaires completed independently by both the husband and wife.

Findings

Nearly 40 percent of the couples make tax decisions jointly, while the remaining couples allow one spouse to dominate tax-related decisions. The results indicate that when one spouse dominates the decisions, it is most often the wife. We also find that couples are more likely to share tax-related decision responsibility jointly when the husband earns significantly more than the wife, when the couple has greater income as a family, and when they are a new couple.

Research limitations/implications

Prior research has generally not recognized tax decisions by married couples as a joint decision or attempted to determine whether tax decisions are dominated by the husband or wife. This issue has implications for interpreting research results in light of prior research that has found that tax-related decisions vary significantly by gender. The finding that many couples make joint decisions suggests that an interesting avenue for future research would be to determine the nature of that joint decision making and whether it is collaborative, bargaining, or something else.

Originality/value

Prior research on tax-related decisions has not recognized that for approximately 40 percent of tax returns filed, the unit of study is not a single individual but a married couple.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-78441-120-6

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Book part
Publication date: 27 October 2016

Amy M. Hageman and Dann G. Fisher

Tax professionals in public accounting firms must meet professional standards in working with their clients, but may also face pressure from both their clients and firms…

Abstract

Tax professionals in public accounting firms must meet professional standards in working with their clients, but may also face pressure from both their clients and firms when making ethical decisions. The purpose of this study is to examine the influence of client factors on tax professionals’ ethical decision-making. Furthermore, we also investigate how client service climate and different ethical climate types affect these ethical decisions. Based on an experimental design with 149 practicing tax professionals, results indicate that tax professionals are not swayed by client importance or social interaction with the client when making ethical decisions. However, tax professionals are more likely to engage in ethical behavior when their own accounting firm monitors and tracks the quality of client service, whereas unethical behavior is more common when public accounting firms emphasize using personal ethical beliefs in decision-making. The results of the study suggest the importance of strong policies and procedures to promote ethical decision-making in firms.

Details

Research on Professional Responsibility and Ethics in Accounting
Type: Book
ISBN: 978-1-78560-973-2

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Article
Publication date: 7 May 2019

Syaiful Iqbal and Mahfud Sholihin

This paper aims to investigate the role of cognitive moral development (CMD) in tax compliance decision. In particular, the study compares tax compliance degree in two…

Abstract

Purpose

This paper aims to investigate the role of cognitive moral development (CMD) in tax compliance decision. In particular, the study compares tax compliance degree in two different tax systems: synergistic and antagonistic tax climates.

Design/methodology/approach

Build on the CMD theory, this study uses a paper and pencil laboratory experiment that involved 157 participants to test the hypotheses.

Findings

CMD has significant contribution to the tax compliance decision, especially for taxpayers at both the pre-conventional and conventional level. Taxpayers who have achieved post-conventional level, however, do not shift their compliance degree even when the tax climate changed. The present results support the CMD theory.

Originality/value

To the best of the authors’ knowledge, the present study is the first to investigate the role of CMDin tax compliance decision by comparing two different tax systems: synergistic and antagonistic tax climates. This study has theoretical and practical contributions. From theoretical perspective, the findings provide evidence that CMD influence tax compliance decision-making processes. In the practical terms, this research may provide a deep insight on the important of government and tax authorities to improve the taxpayers’ moral cognitive, e.g. through any activities which aims to boost them to the level of post-conventional.

Details

International Journal of Ethics and Systems, vol. 35 no. 2
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 1 June 2006

Rex Marshall, Malcolm Smith and Robert Armstrong

The purpose of this paper is to focus on the role of the tax agent as a preparer of tax returns and provider of professional tax advice under a system based on…

Abstract

Purpose

The purpose of this paper is to focus on the role of the tax agent as a preparer of tax returns and provider of professional tax advice under a system based on self‐assessment principles. It recognises the competing pressures under which tax agents attempt to discharge their professional responsibilities, and examines the implications for potentially unethical behaviour.

Design/methodology/approach

The paper uses a mail survey of tax professionals in Western Australia. Respondents are presented with realistic tax return scenarios, in which the demands of the client are varied according to the risk of audit, the severity of tax law and the materiality of dollar amounts involved.

Findings

The findings suggest that the severity of tax law violation is an important factor in ethical decision‐making, but that audit risk and the amounts involved are not.

Research limitations/implications

The lack of support for audit risk as an influential variable is an important outcome, because policy makers have traditionally proceeded on the basis that increases in audit probabilities will reduce the likelihood of taxpayers adopting aggressive tax reporting positions. However, since the findings are based on an Australian sample, care must be taken in generalizing these findings elsewhere.

Practical implications

The implications are important in that alternative enforcement and compliance strategies must be considered by tax administrators.

Originality/value

The paper extends empirical research into taxpayer attitudes to those of the preparers of tax returns. The findings will be of relevance both to tax agents and to tax administrators.

Details

Managerial Auditing Journal, vol. 21 no. 5
Type: Research Article
ISSN: 0268-6902

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Book part
Publication date: 5 October 2020

Malcolm A. Mueller, Frances A. Stott and Aaron B. Wilson

The purpose of this case is to allow students the opportunity to examine how the recent changes to depreciation incentives in the Tax Cuts and Jobs Act of 2017 (P.L…

Abstract

The purpose of this case is to allow students the opportunity to examine how the recent changes to depreciation incentives in the Tax Cuts and Jobs Act of 2017 (P.L. 115-97, Dec. 22, 2017) may affect the purchase of capital assets. Bonus depreciation has been extended to allow an immediate 100% deduction for eligible property, which also now includes used property. This bonus depreciation will be phased out over a nine-year period. Additionally, the progressive marginal tax rate used for business income has been eliminated and replaced by a flat 21% tax rate, representing a 14% drop in the tax rate on businesses.

Specifically, this case will examine how a change from 50% to 100% bonus depreciation affects purchasing decisions between asset classes, due to the exaggerated impact on the net present value for longer lived assets. In keeping with the evolution of accounting in academia, students will be asked both to solve a realistic problem and to communicate their investment decisions effectively. To prepare students for the assignment, the informational building blocks are presented in modules following Bloom’s taxonomy – culminating in the application of the concepts in a decision-making scenario. The learning method applied in this case has been tested in the classroom, with quantifiable results showing a positive learning outcome. Pre- and post-case assessment questions were administered with significant improvement in students reported understanding across all six measures. Based on these results, this case achieves the dual goals of teaching students how to apply the concept of bonus depreciation to maximize value and how to communicate this information effectively.

Details

Advances in Accounting Education: Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-83867-236-2

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Article
Publication date: 21 June 2011

William E. Shafer and Richard S. Simmons

The purpose of this paper is to examine the impact of organizational ethical culture on the ethical decisions of tax practitioners in mainland China.

Abstract

Purpose

The purpose of this paper is to examine the impact of organizational ethical culture on the ethical decisions of tax practitioners in mainland China.

Design/methodology/approach

The study is based on a field survey of practicing public accountants.

Findings

As hypothesized, certain dimensions of ethical culture had highly significant effects on intentions to engage in aggressive tax minimization strategies. Cultures characterized by strong ethical norms and incentives for ethical behavior significantly reduced the reported likelihood of engaging in unethical behavior in a high moral intensity case. In a low moral intensity case, intentions to engage in questionable behavior were significantly higher when participants felt that top managers in their firm were unethical and rewarded unethical behavior. Relativism judgments (judgments of what is traditionally or culturally acceptable or acceptable to one's family) emerged as the strongest determinant of behavioral intentions across both cases. Participants also appeared highly sensitive to questions regarding what is traditionally or culturally acceptable in Chinese tax practice.

Originality/value

This is the first study of ethical decision making among tax practitioners in mainland China, and the findings add to a growing body of literature documenting the significant effects of organizational ethical context on public accountants' decision making processes. This has important implications for CPA firms, suggesting that proactive steps should be taken to promote supportive ethical contexts. The findings for the effects of relativism judgments raise concerns regarding the ethical decisions of Chinese tax practitioners, implying they are likely to engage in unethical behavior if they feel such behavior is common in their cultural environment.

Details

Accounting, Auditing & Accountability Journal, vol. 24 no. 5
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 February 1999

Robert Beale and Howard Davey

Since 1995, the financial reports of New Zealand entities have been legally required to disclose a measure of comprehensive income known as Total Recognised Revenues and…

Abstract

Since 1995, the financial reports of New Zealand entities have been legally required to disclose a measure of comprehensive income known as Total Recognised Revenues and Expenses (TRRE). Financial analysts and members of the Institute of Chartered Accountants of New Zealand were surveyed between 1994 and 1996 to investigate their views on whether TRRE is useful for financial analysis, making economic decisions, and whether it is a useful addition to the financial reports. The findings provided a reasonable level of support for the view that TRRE is useful for financial analysis, such as assessing return on investment. However, there were strong reservations over whether it is useful to use TRRE as a basis for determining remuneration packages for top management, or for predicting cash flows. Overall, there was strong support for the view that TRRE provides information that assists with making economic decisions, and that it is a useful addition to the financial reports.

Details

Asian Review of Accounting, vol. 7 no. 2
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 20 June 2008

William E. Shafer and Richard S. Simmons

The purpose of this paper is to investigate the effects of attitudes toward the perceived importance of corporate ethics and social responsibility, and Machiavellianism, a…

Abstract

Purpose

The purpose of this paper is to investigate the effects of attitudes toward the perceived importance of corporate ethics and social responsibility, and Machiavellianism, a general measure of the propensity for manipulative and deceitful behaviour, on tax professionals' willingness to participate in aggressive tax avoidance schemes of corporate clients.

Design/methodology/approach

The paper is based on a survey of tax professionals in Hong Kong.

Findings

The paper finds that Machiavellianism affects tax advisors' expressed viewpoints toward the importance of corporate ethics and social responsibility, which affect professional judgements toward aggressive tax minimisation. As anticipated, high Machiavellians are more likely to endorse the traditional “stockholder view” of corporate responsibility (which holds that corporations have little responsibility beyond maximising their profits), and less likely to support the “stakeholder view” (which recognises corporate responsibilities to a broader range of potential stakeholders). The stockholder view (but not the stakeholder view) of corporate responsibility mediates the relationship between Machiavellianism and ethical/social responsibility judgements. Machiavellianism also had significant direct effects on ethical and social responsibility judgements.

Originality/value

The paper provides insights into the decision processes used to justify aggressive tax minimisation strategies. The findings indicate that commonly articulated views toward corporate ethics and social responsibility may be used to support unethical strategies. In particular, the finding that the stockholder view mediates the relationship between Machiavellianism and ethical/social responsibility judgements suggests that the stockholder view may be adopted to rationalise overly aggressive tax avoidance.

Details

Accounting, Auditing & Accountability Journal, vol. 21 no. 5
Type: Research Article
ISSN: 0951-3574

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Book part
Publication date: 14 December 2004

Donna D Bobek and Richard C Hatfield

Prior research has identified a number of variables that influence tax professionals’ judgments. However, these variables have usually been examined in isolation. This…

Abstract

Prior research has identified a number of variables that influence tax professionals’ judgments. However, these variables have usually been examined in isolation. This study has two main findings. First, using a structured questionnaire that allows for the collection of variables related to actual tax planning engagements, this study validates the findings of numerous laboratory studies using factor and regression analysis. Factors representing risks and rewards associated with the client and the IRS, along with task characteristics and client aggressiveness significantly affect the aggressiveness of tax advice given to clients. Second, tax professionals do not appear to charge a premium for aggressive tax advice. However, regarding the fee charged, a significant gender effect is found even after controlling for time spent on the engagement, experience, firm size and education.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84950-280-1

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Book part
Publication date: 22 August 2014

Charles F. Kelliher

This chapter presents a seven-part case developed for use in a graduate-level tax planning class. The case is organized in a taxpayer/business “life-cycle” approach. Over…

Abstract

This chapter presents a seven-part case developed for use in a graduate-level tax planning class. The case is organized in a taxpayer/business “life-cycle” approach. Over the semester the case follows a married couple as they consider a number of investments, start a business, and expand the business. As the case progresses, the couple faces increasingly complex tax and business issues. The couple eventually winds down their involvement in the business and begins to plan for their retirement years. This chapter also provides a review of behavioral tax research published in the top accounting journals over the period 2004–2013. The chapter concludes with a discussion of how the case could be adapted by behavioral tax researchers in their research programs and perhaps by accounting firms in their training programs.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78350-445-9

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