An examination of tax professionals' judgments: The role of experience, client condition and reciprocal obligation

In spite of the expanding role of tax preparers in the tax reporting process, very little research has been directed at how tax preparers make tax-related decisions. This study extends prior research by using tax preparers as opposed to taxpayers as subjects. The judgment of tax preparers presumably can be influenced by three categories of factors: 1) factors relating to the law and regulatory environment, 2) individual differences between professionals, and 3) differences across clients and client conditions. This research has focused on the second and third categories of influence. Individual differences examined were experience, ethical disposition and fear of reprisals related to tax preparer penalties. Client related influences examined were reciprocity demands of an aggressive client and year-end client overpayment/underpayment tax position. The subjects in our study indicated significant reticence to recommend an aggressive (yet supportable) position to a client noted to want to follow an aggressive strategy. Further, experienced tax professionals indicated resistance to client condition pressures-underpayment tax status and reciprocity pressure.