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SYNOPSIS: There is a rich literature associated with the dichotomous decision to hire/ not-hire tax preparation services. There is also some research assigning motivation to the decision to hire tax preparation services. However, no research has examined the underlying demographics and key perceptions of clients that do hire tax preparation professionals to determine which are associated with specific motivations to hire. We focus on the four most common motivations to hire a preparer found in extant literature (i.e., saving money, saving time, legal compliance, and protection from the IRS). Using survey data, we perform exploratory analysis using MANCOVA to discover what client demographics and perceptions underlie each motivation.Our most noteworthy finding is that client perceptions of tax advocacy are positively associated with all four focal motivations to hire. Our results also suggest that female clients, more than male clients, choose tax preparers with a desire to save time and to be legally compliant. In addition, taxpayers with children tend to be more concerned with legal compliance. We also find that taxpayers with relatively complex returns are less likely to hire a preparer to provide a legally compliant return and to gain protection from the IRS.

A conflict between the tax preparation services that tax preparers provide and the services taxpayers seek is demonstrated in the literature: tax professionals equate client advocacy with aggressive tax positions while taxpayers hire preparers to increase accuracy and reduce the probability of tax audit. Although this difference has been demonstrated at the large firms, more than half of tax preparers are at regional and local firms. This study examines tax preparers, self-employed or from local and regional firms, and their clients using an established scale—the recently developed Mason–Levy Advocacy Scale. This research measures the understanding taxpayers have of their tax preparers' self-assessed levels of client advocacy. A practically small but statistically significant difference is found. Advocacy is found to be equal between CPAs and non-CPAs—counter to prior research. Also, CPA clients and non-CPA clients are found to have similar perceptions regarding the aggressiveness of their preparers. The implications to practice are that more conservative tax preparation may satisfy clients with less risk and cost. Additionally, less aggressive tax positions will help to close the tax gap.

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