Paul L. Caron

Tuesday, September 29, 2009

Leviner & Richison: The Role of Paid Preparers in Taxpayer Compliance

Sagit Leviner (Ono Academic College, Israel) & Kyle Richison (IRS Office of Research, Analysis, and Statistics) have posted The Role Paid Preparers Play in Taxpayer Compliance in the United States: An Empirical Investigation with Policy Implications on SSRN.  Here is the abstract:

This paper underscores the growing need to shed better light on paid preparers and their effect on the tax system and its administration. The paper undertakes an empirical analysis of U.S. individual tax returns based on (1) tax return characteristics (by line item and type of return), and (2) preparation mode (self or paid prepared return; if paid - whether by lawyer, CPA, enrolled agent or other) as the independent variables. The dependent variable applied is the compliance or noncompliance of these returns. In a second stage of the analysis where noncompliance is found, a taxonomy of the errors identified will be explored to examine whether certain types of errors are associated with the independent factors. By offering a taxonomy of errors and forming a web of associations between these errors and the independent variables, the paper seeks to explore both the motivations behind and facilitators of tax noncompliance as well as the strategies to curb them so as to more effectively foster taxpayer compliance. The analysis draws from 3,457 returns where the taxpayer claimed an Earned Income Tax Credit (EITC) for Tax Year 1999. These returns have all been subject to either face-to-face or correspondence audit and provide a uniquely thorough pool of raw data that is presently unavailable for the general population.

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