Behavioral Factors in Tax Preparer and Tax Compliance Choices

James Alm (), Jubo Yan (), William D. Schulze (), Melissa Vigil () and Carrie von Bose ()
Additional contact information
James Alm: Tulane University
Jubo Yan: Lingnan College, Sun Yat-sen University
William D. Schulze: Cornell University
Melissa Vigil: Internal Revenue Service
Carrie von Bose: Public Company Auditing Oversight Board

No 2606, Working Papers from Tulane University, Department of Economics

Abstract: What tax preparer characteristics are most important to taxpayers in their decision to use a tax preparer, and how does this choice of a tax preparer affect subsequent taxpayer compliance? We use laboratory experiments to examine these questions. We find that individuals in this environment simultaneously choose a preparer and their compliance based in part on factors predicted by the standard expected utility theory of individual behavior under uncertainty. However, we find that factors based on psychological considerations –- which we refer to as “behavioral factors” -– also play an important role in this setting: participants prefer tax preparers who are “credentialed,” even when the cost is high or the credential has no impact on outcomes; participants fear an audit, regardless of its likelihood; participants often choose high-cost preparers even when they are fully compliant; and many participants forego substantial expected earnings rather than underreport income.

Keywords: tax compliance; tax preparer; experimental economics; expected utility theory; behavioral economics (search for similar items in EconPapers)
JEL-codes: C91 H2 H26 (search for similar items in EconPapers)
Date: 2026-05
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