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A Showcase of Tax Research

Survey of taxation analysis carries potential insights for practitioners.

October 2008
by Cynthia Bolt-Lee and Elizabeth Plummer/Journal of Accountancy

Professional tax preparers perform services for their clients that are generally more aggressive than their clients prefer, according to industry research. Research further shows that while tax preparers assume their clients prefer more aggressive positions, clients actually prefer reduced risk. Prior research was conducted with large firms, although more than half of all returns are prepared by self-employed, local or regional firms, including non-CPAs and non-enrolled preparers.

Author Teresa Stephenson’s research surveyed more than 500 tax preparers in 2005 to determine the difference between tax preparers’ perspective of what their clients wanted and the clients’ actual expectations. The sample consisted of non-Big-Four firms and included small CPA firms and non-CPAs. The author’s survey reveals the misperceptions between preparer and taxpayer. This discrepancy is found regardless of whether a CPA or non-CPA prepares the return.

The research provides a further understanding of the miscommunications between professional tax preparers and their clients. Stephenson’s study suggests that clients not only misunderstand their tax preparer’s intentions but that taxpayers generally prefer a more conservative approach than that perceived by preparers. In light of these findings, tax preparers and advisers may want to review their communication procedures, particularly how they discuss with their clients matters of risk preferences and tolerance.

This has been excerpted from the Journal of Accountancy. View the full article here.