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In this study, the taxation knowledge, service, and sanction of the head of village government financial affairs (KAUR of village financial) in Gunung Kidul Regency, Indonesia, were investigated. The data were the primary data obtained by using questionnaires and interview methods. The respondents consisted of 144 of the KAUR of village financial in Gunung Kidul Regency. The sampling data were obtained using a convenience sampling method and then examined by validity test, reliability test, classical assumption test, adjusted R², and t-value test. The obtained questionnaire data showed that the data were valid, reliable, and appropriate to the classical assumption test. The adjusted R² showed a strong correlation of the dependent variable to the independent variable. Furthermore, the t-tested value results showed that the KAUR of village financial in Gunung Kidul Regency fully understood the responsibility of the taxation knowledge, services, and sanctions.

Prior research finds evidence that audit quality is positively associated with the joint purchase of tax nonaudit services (NAS) and concludes that jointly provided tax services result in audit-related knowledge spillovers that lead to improved audit quality. We extend this line of research. We examine the relation between auditor-provided tax services and restatements and determine whether this relation differs when the auditor is a small or large accounting firm. We also examine whether the Securities Exchange Commission’s restrictions on certain tax consulting practices (SEC, 2006) altered this relation. Specifically, we measure whether the probability of financial statement restatements varies with (1) variation in accounting firm size (measured as PCAOB annually inspected firms versus PCAOB triennially inspected firms), and (2) the joint provision of audit and tax services. We find a negative relation between auditor-provided tax services and restatements which is consistent with prior research. We also find that this relation is significantly more negative when the auditor is a small accounting firm. Finally, we find that the lower probability of a restatement associated with the joint provision of audit and tax services persists regardless of auditor size after the SEC-imposed restrictions on certain tax consulting services in 2006. Our study provides evidence that accounting firms, and particularly small accounting firms, benefit from knowledge spillovers when jointly providing audit and tax services and these benefits lead to improved audit quality. Prior research concludes that large auditors provide higher audit quality and that the provision of tax services improves audit quality. Our results provide evidence that audit quality improvements are greater for small auditors and their clients. This improvement narrows that audit quality gap between large and small auditors. We do not find evidence that the SEC’s restrictions on certain tax consulting services altered the relation between audit quality and tax services.

The authors use experiential learning theories to examine college students’ acquisition of tax knowledge and tax literacy. Tax knowledge is important because taxation affects virtually all adults, college students are often employed and subject to individual taxation, and understanding taxation and tax planning has both current and future implications for individuals’ financial well-being. Further, taxation is a key policy issue, and college student voters have the potential to impact tax policy choices. The results of this study show that real-world experiences improve college students’ understanding of tax concepts; this relationship holds for overall understanding and for understanding both current tax issues and tax issues that will have an impact in the future. The authors predict and find that a student’s socioeconomic status is positively related to understanding of tax concepts. The authors also find that the level of understanding of tax concepts is still limited; many students do not have a strong knowledge of tax concepts. The relatively low levels of understanding may have implications for structuring college curricula to improve tax literacy.

This paper uses two studies to examine taxpayers' knowledge of tax incentives for charitable giving and also explores the consequences of this knowledge on charitable giving decisions. The first study surveys 600 US taxpayers to establish a baseline understanding of how making a charitable contribution affects taxpayers. In the second study, we conduct an experiment with 201 US taxpayers in which we manipulate the knowledge of taxpayers by providing an educational intervention; we also measure, if, how much is donated in a hypothetical scenario under various tax deductibility conditions. The first study indicates fewer than half of participants understand the basic principles of how charitable donations affect tax liability. Our second study reveals that a short educational video is extremely effective at improving taxpayers' understanding and helping them accurately estimate the tax benefit associated with charitable giving. However, through moderated mediation analysis, we also show that participants who received this educational intervention and accurately estimated the tax benefits in turn decreased their charitable giving. We conclude that the majority of US taxpayers do not understand whether they benefit from certain deductions and may be overestimating the benefit they receive from charitable giving, resulting in giving more than they intend.

This study investigates the influence of tax research self-efficacy on tax research performance for a group of novice tax accountants. Tax research self-efficacy is a judgment of one's ability to perform the specific tasks necessary to solve tax problems. Theory predicts that self-efficacy will be positively associated with task performance and people's ability to cope with task difficulty. We tested this notion using a computer-based experimental approach to determine if novices with different levels of tax research self-efficacy perform differently when conducting a series of tax research tasks under difficult conditions. Our results, after controlling for certain performance-influencing factors, indicate that tax research self-efficacy is a significant predictor of tax research performance for novice tax accountants. This finding provides evidence of the construct validity of the tax research self-efficacy scale developed by Schmidt and Karsten (2000) and adds to our understanding of the factors that influence tax research performance.

This study examines whether Revenue Procedure 2003-61 is an improvement over Revenue Procedure 2000-15, in the areas of taxpayers’ expectations for IRS equitable relief decisions and gender-related in-group bias. The survey instrument includes a vignette adapted from a judicial decision. The results show that Rev. Proc. 2003-61 does improve upon Rev. Proc. 2000-15. Furthermore, taxpayers perceive different expectations of what the IRS should do and what the IRS would do in equitable relief decision making. Also, gender-related in-group biases are found to be present for both genders. Tax policy implications regarding equitable relief are discussed.

This paper investigates how individuals determine their tax morale levels and tax compliance decisions. Using a questionnaire survey and a multivariate tests procedure, the paper revealed that tax evasion is morally acceptable in Jordan under some circumstances, indeed there could be an affirmative duty to evade taxes since the government is perceived to be highly corrupted. The findings also show that while the extent of the governmental corruption has a positive (negative) effect on tax non-compliance (tax morale), the efficient expenditure of governmental tax revenues has a negative (positive) impact on tax non-compliance (tax morale). The individuals’ tax non-compliance decisions are likewise positively affected by the tax rates and by the taxation system’s being perceived as unjust, but decline with the increase of audit rates and the subsequent penalty rates. The degree and effectiveness of these determinants are dependent on the individual’s level of risk aversion, financial constraints and the surrounding referent groups. The results also confirm that individual factors play a significant role in determining the level of tax morale. Overall, the tax morale level and the compliance decision of an individual are greatly influenced by gender, age, educational level, occupational status and religious background.

Tax education, a subset of accounting education formed in the early 1900s, was largely ignored as a discipline until the 1970s. Over time, tax became a more prevalent part of accounting practice and the CPA examination. In 1996, the AICPA developed the Model Tax Curriculum (MTC) to give a practitioner’s perspective on how taxation should be taught in higher education. This chapter provides a history of tax education and the responses of tax educators to the MTC Task Force’s recommendations in 1996 and the revisions in 2007 and 2014. The authors surveyed tax educators five times over 23 years to get a sense of the MTC’s adoption, both in the past and future terms. The authors found that tax educators largely ignored the MTC Task Force’s recommendations. This chapter discusses reasons given by respondents for not following the MTC and offers various strategies the MTC Task Force and others might consider when recommending future tax education reforms.

When presented with technical topics, undergraduate accounting students can be overwhelmed by information transmitted in a pure lecture format. Further, a lecture format does not allow for much student interaction or enable learning of higher-level skills that could be useful if the underlying content is changed by future regulations. Position paper instructional tools could be a beneficial alternative. A position paper can bring out students' soft skills of communication and critical thinking by making them take a stand, which is key for tax professionals and accountants generally. Since class meeting time is limited and face-to-face interactions are not always possible, a written position paper provides an alternative that can benefit students' understanding of technical information.

This chapter examines how public attitudes and judgments about tax fairness reflect distributive justice rules about proportionality/contributions, needs, and equality; fairness issues that influence voluntary tax compliance (Hofmann, Hoelzl, & Kirchler, 2008; Spicer & Lundstedt, 1976). Most public polls and some prior research indicate the general public considers progressive income tax rates as fairer than flat tax rates, a reflection of the Needs rule of distributive justice theory; our 1,138 participants respond similarly. However, two-thirds of our politically representative sample of the American public actually assign “fair shares” of income taxes consistently with fairness-as-proportionality above an exempt amount of income, consistent with the Contributions rule of Equity Theory. We argue experimental assignments of fair shares of income taxes can best be understood as a combination of the Needs rule, applied by exempting incomes below the poverty line from income taxation (via current standard deductions) and taxing incomes above this exempt amount at a single tax rate (i.e., a flat-rate tax) consistent with the Proportionality/Contributions rule. Viewed in combination, these two distributive justice rules explain the tax fairness judgments of 89% of our sample and indicate surprising general agreement about what constitutes a fair share of income taxes that should be paid by US citizens from the 5th percentile to the 95th percentile of the income distribution. The joint application of these fairness rules indicates how seemingly competing, partisan distributive justice concerns can inform our understanding of social attitudes about tax fairness across income classes.