The Effect of Tax Preparation Expenses for Employees: Evidence from Germany

Blaufus, Kay; Hechtner, Frank; Möhlmann, Axel

doi:10.2139/ssrn.2373740

Cited by 5 publications

(5 citation statements)

References 30 publications

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“…Even though StB shows no correlation with tax rates in the descriptives and no association with the effective tax rate ETR in the analyses, the empirical results suggest that having an individual auditor that is also a certified tax consultant is associated with a higher current effective tax rate by about 4.8% points and a higher cash effective tax rate by about 5.5% points. These results are in contrast with prior studies that find tax consultants reduce tax payers' tax burden (see Blaufus et al 2014;Kittl 2015;McGuire et al 2012) but suggest that interactions with effective tax rates differ as soon as the tax consultants under investigation are auditors.…”

Section: Introductioncontrasting

confidence: 99%

“…Finally, my study expands literature on the influence of tax consultants on tax payers' tax burden. So far, prior research examines the effect of pure tax advisors on individual tax payers' non-business income (e.g., Blaufus et al 2014;Kittl 2015). I extend this stream of research by investigating whether auditors who are primarily operating as auditors but hold the professional qualification of a tax consultant are associated with publicly disclosed corporate tax burdens.…”

Section: Introductionmentioning

confidence: 99%

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Tax certified individual auditors and effective tax rates

Frey

2017

Bus Res

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This study examines how the appointment of tax certified individual auditors is associated with reported effective tax rates of corporate clients. The study uses a unique German institutional setting which makes it possible to track individual auditors that are also certified tax consultants and sign the audit opinion.Empirical results indicate that tax certified individual engagement partners are associated with higher effective tax rates. Further tests reveal that this association also exists for individual parent company financial statements and that it is stronger when tax confirmation services are provided to the audit client. My findings enhance the understanding of the role of individual auditors.Keywords Tax certified individual auditor Á Effective tax rate Á Knowledge spillover JEL Classification M41 Á M42 Á H26

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Section: Introductioncontrasting

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Tax certified individual auditors and effective tax rates

Frey

2017

Bus Res

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“…1 In other words, we assume that tax planning investments and the output of tax planning (expected tax savings) are positively related because rationally acting firms only conduct profitable investments. This rationale is in line with previous research on the return of investments to tax planning (Blaufus et al 2017;Mills et al 1998). In this vein, the marginal tax planning investment should provide a net present value amounting to zero, and by increasing the detection costs of tax planning, the net present value of the former marginal investment becomes negative such that firms reduce their investment level to a new level.…”

Section: The Effect Of Tax Audit Aggressiveness On Firms' Tax Plannin...supporting

confidence: 86%

Perceived tax audit aggressiveness, tax control frameworks and tax planning: an empirical analysis

Blaufus¹,

Reineke²,

Trenn³

2022

J Bus Econ

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This paper examines whether a perceived increase in tax audit aggressiveness is associated with lower tax planning effort and a higher quality of internal tax control frameworks. Using survey data on corporate tax functions from approximately 200 firms from different countries, contrary to expectations, we find that neither internal nor external resources devoted to tax planning are lower for firms that perceive an increase in tax audit aggressiveness. Nevertheless, for these firms, we find a positive association with the quality of their tax control framework and their investments in the reputation management and communication skills of their tax department staff. In line with this, we find that an increase in perceived audit aggressiveness is directly (indirectly) associated with an increase in resources allocated to the tax function “controversy and audit defense” (“risk management and governance”). In addition, our results show a positive relationship between the quality of the tax control framework and the need for comprehensive improvements in human capital and internal processes, suggesting that the tax control framework affects the firms' perceptions of their tax capabilities and drives organizational changes. Overall, these findings are in line with the rationale that an increase in audit aggressiveness changes the costs of compliance errors such that firms improve the quality of their tax control framework to reduce future errors. In contrast, it remains unclear whether tax audit aggressiveness actually changes tax planning behavior, as we find no negative association with the firms' investment in tax planning.

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“…This suggests that taxpayers who seek tax advice delegate their tax affairs to experts without building up their own expertise. In line with this, research shows that taxpayers seek tax advice even if the resulting tax savings are lower than the fees paid to preparers to reduce tax uncertainty and cope with the inherent taxcomplexity (Blaufus, Hechtner, & Möhlmann, 2017). different kind of taxes, or directly measure corporate managers' misperception of tax rates or tax burdens.…”

Section: Open Research Questionsmentioning

confidence: 95%

Tax Misperception and Its Effects on Decision Making – a Literature Review

Blaufus

Chirvi²,

Huber³

et al. 2020

SSRN Journal

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Previous accounting research shows that taxes affect decision making by individuals and firms. Most studies assume that agents have accurate perception regarding their tax burden. However, there is a growing body of literature analyzing whether taxes are indeed perceived correctly. We review 124 studies on the measurement of tax misperception and its behavioral implications. The review reveals that many taxpayers have substantial tax misperceptions that lead to biased decision making. We develop a Behavioral Taxpayer Response Model on the impact of provided tax information on tax perception. Besides individual traits, characteristics of the tax information and the decision environment determine the extent of tax misperception. We discuss opportunities for future research and methodological limitations. While there is much evidence on tax misperception at the individual level, we hardly find any research at the firm level. Little is known about the real effects of managers' tax misperception and on how tax information is strategically managed to impact stakeholders. This research gap is surprising as a large part of the accounting literature analyzes decision making and disclosure of firms. We recommend a mixed-method approach combining experiments, surveys, and archival data analyses to improve the knowledge on tax misperception and its consequences.

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The Effect of Tax Preparation Expenses for Employees: Evidence from Germany

Cited by 5 publications

References 30 publications

Tax certified individual auditors and effective tax rates

Tax certified individual auditors and effective tax rates

Perceived tax audit aggressiveness, tax control frameworks and tax planning: an empirical analysis

Tax Misperception and Its Effects on Decision Making – a Literature Review

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