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Reference Points, Mental Accounting, and Taxpayer Compliance: Insights From a Field Study

Ian Burt et al.

Advances in Accounting Behavioral Research2023https://doi.org/10.1108/s1475-148820230000026006book-chapter
AJG 2ABDC A
Weight
0.62

Abstract

We investigate how different cognitive conceptualizations of reference point and tax withholdings jointly influence aggressive tax filing. We utilize a field study with responses captured from actual taxpayers immediately after filing their returns. Consistent with both prospect theory and mental accounting perspectives, we hypothesize and find evidence that more aggressive filing decisions depend on mental categorization of whether taxpayers expect a tax refund or owe additional taxes relative to their expected asset position (EAP). We find a joint and additive impact of EAP with a cognitive link made between taxes and the categorization of amounts owed. Our findings suggest that more aggressive filing behavior is found in taxpayers in a tax loss position relative to their EAP and in those that do not separately categorize taxes owing from their own resources. By highlighting the importance of EAP and the cognitive separation of taxes owed, we provide insight for revenue agencies to use cognitive framing strategies to mitigate aggressive taxpayer behavior. The cognitive framing of EAP may be influenced by the use of installment payments and tax withholdings, but also may be affected by communications that alter taxpayers' expectations of taxes owed.

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https://doi.org/https://doi.org/10.1108/s1475-148820230000026006

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@article{ian2023,
  title        = {{Reference Points, Mental Accounting, and Taxpayer Compliance: Insights From a Field Study}},
  author       = {Ian Burt et al.},
  journal      = {Advances in Accounting Behavioral Research},
  year         = {2023},
  doi          = {https://doi.org/https://doi.org/10.1108/s1475-148820230000026006},
}

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Reference Points, Mental Accounting, and Taxpayer Compliance: Insights From a Field Study

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Evidence weight

0.62

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.70 × 0.4 = 0.28
M · momentum0.80 × 0.15 = 0.12
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.