Agreement with tax practitioners' advice under tax law ambiguity

Abstract

Taxpayers who cannot cope with or understand the complexity of tax requirement engage the services of a tax practitioner to help them resolve uncertainties, and practitioners are known to exploit tax loopholes to the taxpayers' advantage. The present study posed an interesting question: if practitioners provide aggressive advice, will taxpayers agree with them and what influences their decision? a self-administered mail survey was used to elicit the perceptions and attitudes of a nationwide, random sample of New Zealand business taxpayers. One of the key issues emerging from the study is that for business taxpayers, their risk attitudes such as sanction risk perceptions, personal risk propensity, and risk expectations were important determinants of their tax decisions after their practitioners had given them advice. However, other factors such as personal tax ethics, business tax ethics, firm size, and audit experience have no impact on business taxpayers' agreement with advice.