This study provides new insights about how tax professionals' economic and social relationships with clients separately and jointly affect tax professionals' propensity to recommend aggressive tax positions to clients when resolving ambiguous issues. In an experiment with 133 practicing tax professionals, we manipulate the economic importance of the client and client identification (a social construct). We find that as the economic importance of the client increases, professional recommendations follow an inverted U-shaped pattern. Tax professionals more strongly recommend aggressive positions for clients of moderate economic importance than for clients of low or high economic importance. We also find that tax professionals with high versus low client identification provide more aggressive recommendations for clients of low or moderate economic importance, but not for clients of high economic importance. This paper contributes to the literature by identifying a boundary condition on client identification that has not been considered in prior accounting research.
{"title":"The Effects of Economic and Social Bonds with Clients on Tax Professionals' Recommendations","authors":"Beth Y. Vermeer, Brian C. Spilker, A. P. Curatola","doi":"10.2308/ATAX-52509","DOIUrl":"https://doi.org/10.2308/ATAX-52509","url":null,"abstract":"\u0000 This study provides new insights about how tax professionals' economic and social relationships with clients separately and jointly affect tax professionals' propensity to recommend aggressive tax positions to clients when resolving ambiguous issues. In an experiment with 133 practicing tax professionals, we manipulate the economic importance of the client and client identification (a social construct). We find that as the economic importance of the client increases, professional recommendations follow an inverted U-shaped pattern. Tax professionals more strongly recommend aggressive positions for clients of moderate economic importance than for clients of low or high economic importance. We also find that tax professionals with high versus low client identification provide more aggressive recommendations for clients of low or moderate economic importance, but not for clients of high economic importance. This paper contributes to the literature by identifying a boundary condition on client identification that has not been considered in prior accounting research.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45239391","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As the U.S. dollar (USD) strengthens relative to foreign currencies, the USD value of foreign subsidiary-to-parent dividends decreases, and the foreign tax credit remains anchored at a blended rate. During periods of USD strength, this asymmetry lowers the effective tax cost of repatriation at the cost of a lower after-tax dividend to the U.S. parent. This paper develops a firm-specific measure of currency exposure and provides evidence that repatriation likelihood increases during periods of firm-specific USD strength. We show that investors place a premium on repatriation costs when the USD strengthens against a firm-specific basket of currencies for repatriating firms. This premium implies that investors value the benefit of a lower effective tax cost of repatriation more than the potential cost of a lower after-tax dividend available to the U.S. parent. These results appear concentrated in firms with high levels of foreign cash and firms susceptible to earnings fixation.
{"title":"Firm-Specific Currency Exposure, Repatriation, and the Market Value of Repatriation Taxes","authors":"Jimmy F. Downes, Mollie E. Mathis, L. Kutcher","doi":"10.2308/atax-52606","DOIUrl":"https://doi.org/10.2308/atax-52606","url":null,"abstract":"\u0000 As the U.S. dollar (USD) strengthens relative to foreign currencies, the USD value of foreign subsidiary-to-parent dividends decreases, and the foreign tax credit remains anchored at a blended rate. During periods of USD strength, this asymmetry lowers the effective tax cost of repatriation at the cost of a lower after-tax dividend to the U.S. parent. This paper develops a firm-specific measure of currency exposure and provides evidence that repatriation likelihood increases during periods of firm-specific USD strength. We show that investors place a premium on repatriation costs when the USD strengthens against a firm-specific basket of currencies for repatriating firms. This premium implies that investors value the benefit of a lower effective tax cost of repatriation more than the potential cost of a lower after-tax dividend available to the U.S. parent. These results appear concentrated in firms with high levels of foreign cash and firms susceptible to earnings fixation.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42656723","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In each issue, JATA publishes reviews of textbooks and other books of interest to tax scholars. All book reviews are solicited by the Associate Editor. However, if you know of a book that you would like reviewed, or if you are interested in reviewing a book, please contact the Associate Editor.
{"title":"Book Reviews","authors":"Bryan C. Keene","doi":"10.2308/atax-10711","DOIUrl":"https://doi.org/10.2308/atax-10711","url":null,"abstract":"In each issue, JATA publishes reviews of textbooks and other books of interest to tax scholars. All book reviews are solicited by the Associate Editor. However, if you know of a book that you would like reviewed, or if you are interested in reviewing a book, please contact the Associate Editor.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49216082","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We experimentally investigate how tax authority responsibility for preventing identity theft and tax authority responsiveness following identity theft influence taxpayers' trust in the tax authority and subsequent tax compliance intentions. We find evidence that trust mediates the positive relation between tax authority responsiveness and compliance, but that this mediation effect is conditional upon levels of tax authority responsibility for the identity theft. Specifically, when taxpayers perceive that the tax authority is to blame for the identity theft, higher responsiveness by the tax authority does not significantly influence compliance through trust. However, when the tax authority is not to blame for identity theft, higher responsiveness by the tax authority significantly influences compliance through trust. These findings suggest that when the tax authority is to blame for identity theft, there may be little it can do to increase taxpayers' trust and subsequent compliance.
{"title":"Trust and Compliance Effects of Taxpayer Identity Theft: A Moderated Mediation Analysis","authors":"Jonathan Farrar, Cass Hausserman, Odette M. Pinto","doi":"10.2308/ATAX-52404","DOIUrl":"https://doi.org/10.2308/ATAX-52404","url":null,"abstract":"\u0000 We experimentally investigate how tax authority responsibility for preventing identity theft and tax authority responsiveness following identity theft influence taxpayers' trust in the tax authority and subsequent tax compliance intentions. We find evidence that trust mediates the positive relation between tax authority responsiveness and compliance, but that this mediation effect is conditional upon levels of tax authority responsibility for the identity theft. Specifically, when taxpayers perceive that the tax authority is to blame for the identity theft, higher responsiveness by the tax authority does not significantly influence compliance through trust. However, when the tax authority is not to blame for identity theft, higher responsiveness by the tax authority significantly influences compliance through trust. These findings suggest that when the tax authority is to blame for identity theft, there may be little it can do to increase taxpayers' trust and subsequent compliance.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49604755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Discussion of Trust and Compliance Effects of Taxpayer Identity Theft: A Moderated Mediation Analysis","authors":"Diana Falsetta","doi":"10.2308/ATAX-52517","DOIUrl":"https://doi.org/10.2308/ATAX-52517","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44403822","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the impact of the internal controls over financial reporting requirements (ICFR) on the decision making of corporate tax executives. I examine tax executives' decisions to disclose an internal control deficiency by amending a prior year return when the internal control deficiency will be classified as either a significant deficiency or a material weakness. I also examine if tax executives' decisions are impacted by whether amending results in a refund or additional tax due. I find tax executives are less likely to disclose (amend) when the internal control deficiency is classified as a material weakness. When facing a material weakness, 16.7 percent choose not to disclose. Tax executives are also less likely to disclose (amend) when amending results in additional tax due. These results indicate the ICFR requirements may have unintended consequences. If executives do not disclose internal control deficiencies, the reliability of financial reporting is limited.
{"title":"The Unintended Consequences of Internal Controls Reporting on Tax Decision Making","authors":"V. Hansen","doi":"10.2308/ATAX-52514","DOIUrl":"https://doi.org/10.2308/ATAX-52514","url":null,"abstract":"\u0000 This study investigates the impact of the internal controls over financial reporting requirements (ICFR) on the decision making of corporate tax executives. I examine tax executives' decisions to disclose an internal control deficiency by amending a prior year return when the internal control deficiency will be classified as either a significant deficiency or a material weakness. I also examine if tax executives' decisions are impacted by whether amending results in a refund or additional tax due. I find tax executives are less likely to disclose (amend) when the internal control deficiency is classified as a material weakness. When facing a material weakness, 16.7 percent choose not to disclose. Tax executives are also less likely to disclose (amend) when amending results in additional tax due. These results indicate the ICFR requirements may have unintended consequences. If executives do not disclose internal control deficiencies, the reliability of financial reporting is limited.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42693146","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We provide a theoretical framework to identify when measures of tax avoidance reflect tax avoidance related to, and unrelated to, earnings management. The influence of earnings management on measures of tax avoidance occurs because pretax financial accounting income is used as a benchmark against which tax payments are measured. A firm that manages earnings upward without paying additional tax on the managed earnings can be considered to have avoided tax. We demonstrate that a measure of tax avoidance that has been used in prior research—the ratio of cash taxes paid to pretax operating cash flows—captures tax avoidance that is unrelated to earnings management. Use of this alternate measure in empirical studies can avoid attributing earnings management results to tax avoidance. JEL Classifications: M41; H25; G12.
{"title":"Identifying Different Types of Tax Avoidance: Implications for Empirical Research","authors":"David A. Guenther, Linda K. Krull, B. Williams","doi":"10.2308/jata-17-044","DOIUrl":"https://doi.org/10.2308/jata-17-044","url":null,"abstract":"\u0000 We provide a theoretical framework to identify when measures of tax avoidance reflect tax avoidance related to, and unrelated to, earnings management. The influence of earnings management on measures of tax avoidance occurs because pretax financial accounting income is used as a benchmark against which tax payments are measured. A firm that manages earnings upward without paying additional tax on the managed earnings can be considered to have avoided tax. We demonstrate that a measure of tax avoidance that has been used in prior research—the ratio of cash taxes paid to pretax operating cash flows—captures tax avoidance that is unrelated to earnings management. Use of this alternate measure in empirical studies can avoid attributing earnings management results to tax avoidance.\u0000 JEL Classifications: M41; H25; G12.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":"1 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2020-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41379227","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects firms' decisions to evade tax. We argue that firms are less willing to comply with tax laws when they perceive the influence over their government to be unfavorable to them or the result of an unfair policymaking process. Consistent with this argument, we find that firms evade more tax when other domestic firms have more perceived influence over domestic government policymaking. This suggests a potential negative externality of lobbying: higher tax evasion by other firms. However, government effectiveness or lack of corruption eliminates the positive relation between evasion and perceived influence over policymaking. Our study is the first to document the relation between perceived influence over government policymaking and tax evasion. Our results suggest that limiting domestic firms' influence over policymaking could help governments decrease tax evasion. JEL Classifications: H26. Data Availability: Data used in this study are available from public sources identified in the paper, except as otherwise specified.
{"title":"Why Pay Our Fair Share? How Perceived Influence over Laws Affects Tax Evasion","authors":"Paul J. Mason, Steven Utke, B. Williams","doi":"10.2308/ATAX-52598","DOIUrl":"https://doi.org/10.2308/ATAX-52598","url":null,"abstract":"\u0000 We examine how the relation between taxpayers and their government affects tax evasion. Specifically, we examine how perceived influence over government policymaking affects firms' decisions to evade tax. We argue that firms are less willing to comply with tax laws when they perceive the influence over their government to be unfavorable to them or the result of an unfair policymaking process. Consistent with this argument, we find that firms evade more tax when other domestic firms have more perceived influence over domestic government policymaking. This suggests a potential negative externality of lobbying: higher tax evasion by other firms. However, government effectiveness or lack of corruption eliminates the positive relation between evasion and perceived influence over policymaking. Our study is the first to document the relation between perceived influence over government policymaking and tax evasion. Our results suggest that limiting domestic firms' influence over policymaking could help governments decrease tax evasion.\u0000 JEL Classifications: H26.\u0000 Data Availability: Data used in this study are available from public sources identified in the paper, except as otherwise specified.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2019-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46666285","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-09-01DOI: 10.2308/1558-8017-41.2.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/1558-8017-41.2.i","DOIUrl":"https://doi.org/10.2308/1558-8017-41.2.i","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2019-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48470745","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"DISCUSSION OF Did the FASB's Simplification Initiative Increase Errors in Analysts' Implied ETR Forecasts? Evidence from Early Adoption of ASU 2016-09","authors":"Rebecca Lester","doi":"10.2308/ATAX-52411","DOIUrl":"https://doi.org/10.2308/ATAX-52411","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2019-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45259331","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：