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• 15 Dec 2020
• Working Paper Summaries

Designing, Not Checking, for Policy Robustness: An Example with Optimal Taxation

The approach used by most economists to check academic research results is flawed for policymaking and evaluation. The authors propose an alternative method for designing economic policy analyses that might be applied to a wide range of economic policies.

• 31 Aug 2020
• Research & Ideas

State and Local Governments Peer Into the Pandemic Abyss

State and local governments that rely heavily on sales tax revenue face an increasing financial burden absent federal aid, says Daniel Green. Open for comment; 0 Comments.

• 12 May 2020

Elusive Safety: The New Geography of Capital Flows and Risk

Examining motives and incentives behind the growing international flows of US-denominated securities, this study finds that dollar-denominated capital flows are increasingly intermediated by tax haven financial centers and nonbank financial institutions.

• 01 Apr 2019
• What Do You Think?

Does Our Bias Against Federal Deficits Need Rethinking?

SUMMING UP. Readers lined up to comment on James Heskett's question on whether federal deficit spending as supported by Modern Monetary Theory is good or evil. Open for comment; 0 Comments.

• 20 Mar 2019

In the Shadows? Informal Enterprise in Non-Democracies

With the informal economy representing a third of the GDP in an average Middle East and North African country, why do chronically indebted regimes tolerate such a large and untaxed shadow economy? Among this study’s findings, higher rates of public sector employment correlate with greater permissibility of firm informality.

• 30 Jan 2019

Understanding Different Approaches to Benefit-Based Taxation

Benefit-based taxation—where taxes align with benefits from state activities—enjoys popular support and an illustrious history, but scholars are confused over how it should work, and confusion breeds neglect. To clear up this confusion and demonstrate its appeal, we provide novel graphical explanations of the main approaches to it and show its general applicability.

• 02 Jul 2018

Corporate Tax Cuts Don't Increase Middle Class Incomes

New research by Ethan Rouen and colleagues suggests that corporate tax cuts contribute to income inequality. Open for comment; 0 Comments.

• 13 May 2018

Corporate Tax Cuts Increase Income Inequality

This paper examines corporate tax reform by estimating the causal effect of state corporate tax cuts on top income inequality. Results suggest that, while corporate tax cuts increase investment, the gains from this investment are concentrated on top earners, who may also exploit additional strategies to increase the share of total income that accrues to the top 1 percent.

• 08 Feb 2018

What’s Missing From the Debate About Trump’s Tax Plan

At the end of the day, tax policy is more about values than dollars. And it's still not too late to have a real discussion over the Trump tax plan, says Matthew Weinzierl. Open for comment; 0 Comments.

• 24 Oct 2017

Tax Reform is on the Front Burner Again. Here’s Why You Should Care

As debate begins around the Republican tax reform proposal, Mihir Desai and Matt Weinzierl discuss the first significant tax legislation in 30 years. Open for comment; 0 Comments.

• 08 Aug 2017

The Role of Taxes in the Disconnect Between Corporate Performance and Economic Growth

This paper offers evidence of potential issues with the current United States system of taxation on foreign corporate profits. A reduction in the US tax rate and the move to a territorial tax system from a worldwide system could better align economic growth with growth in corporate profits by encouraging firms to invest domestically and repatriate foreign earnings.

• 07 Nov 2016

Corporate Tax Strategies Mirror Personal Returns of Top Execs

Top executives who are inclined to reduce personal taxes might also benefit shareholders in their companies, concludes research by Gerardo Pérez Cavazos and Andreya M. Silva. Open for comment; 0 Comments.

• 18 Apr 2016

Popular Acceptance of Morally Arbitrary Luck and Widespread Support for Classical Benefit-Based Taxation

This paper presents survey evidence that the normative views of most Americans appear to include ambivalence toward the egalitarianism that has been so influential in contemporary political philosophy and implicitly adopted by modern optimal tax theory. Insofar as this finding is valid, optimal tax theorists ought to consider capturing this ambivalence in their work, as well.

• 20 Nov 2015

Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods

Dina Pomeranz examines the use by public agencies of rigorous impact evaluations to test the effectiveness of citizen efforts.

• 07 May 2014

How Should Wealth Be Redistributed?

SUMMING UP James Heskett's readers weigh in on Thomas Piketty and how wealth disparity is burdening society. Closed for comment; 0 Comments.

• 08 Sep 2009

The Height Tax, and Other New Ways to Think about Taxation

The notion of levying higher taxes on tall people—an idea offered largely tongue in cheek—presents an ideal way to highlight the shortcomings of current tax policy and how to make it better. Harvard Business School professor Matthew C. Weinzierl looks at modern trends in taxation. Key concepts include: Studies show that each inch of height is associated with about a 2 percent higher wage among white males in the United States. If we as a society are uncomfortable taxing height, maybe we should reconsider our comfort level for taxing ability (as currently happens with the progressive income tax). For Weinzierl, the key to explaining the apparent disconnect between theory and intuition starts with the particular goal for tax policy assumed in the standard framework. That goal is to minimize the total sacrifice borne by those who pay taxes. Behind the scenes, important trends are evolving in tax policy. Value-added taxes, for example, are generally seen as efficient by tax economists, but such taxes can bear heavily on the poor if not balanced with other changes to the system. Closed for comment; 0 Comments.

• 02 Mar 2007

What Is the Government’s Role in US Health Care?

Healthcare will grab ever more headlines in the U.S. in the coming months, says Jim Heskett. Any service that is on track to consume 40 percent of the gross national product of the world's largest economy by the year 2050 will be hard to ignore. But are we addressing healthcare cost issues with the creativity they deserve? What do you think? Closed for comment; 0 Comments.

A Review of Tax Research

138 Pages Posted: 23 Sep 2009 Last revised: 28 Jul 2010

Michelle Hanlon

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Shane Heitzman

University of Southern California - Marshall School of Business

Date Written: July 25, 2010

In this paper, we present a review of tax research. We survey four main areas of the literature: 1) the informational role of income tax expense reported for financial accounting, 2) corporate tax avoidance, 3) corporate decision-making including investment, capital structure, and organizational form, and 4) taxes and asset pricing. We summarize the research areas and questions examined to date and what we have learned or not learned from the work completed thus far. In addition, we provide our opinion as to the interesting and important issues for future research.

Keywords: taxes, corporate finance, investment, asset pricing, financial reporting, corporate governance

JEL Classification: G30, H25, K34, L21, M41

Suggested Citation: Suggested Citation

Michelle Hanlon (Contact Author)

Massachusetts institute of technology (mit) - sloan school of management ( email ).

100 Main Street E62-668 Cambridge, MA 02142 United States 617-253-9849 (Phone)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd Los Angeles, CA California 90089 United States

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Earnings Management: New Evidence Based on Deferred Tax Expense

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An Evaluation of Alternative Measures of Corporate Tax Rates

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Tax Compliance: Research Methods and Decision Processes

• First Online: 22 July 2020

Cite this chapter

• Andre Julian Hartmann 3 ,
• Martin Mueller 3 &
• Erich Kirchler 3  

1290 Accesses

Traditionally, research focuses on individual taxpayers that—when faced with a decision under uncertainty—are assumed to maximize their profits through rational decision processes. However, economic psychology and behavioral economics reveal several anomalies where the observed effects are opposite to the theoretical predictions. Moreover, psychological research provides evidence for the importance of factors such as the understanding of the tax law, attitudes toward taxes and tax morale, personal and social norms, and perception of distributive and procedural justice. In this paper, we provide a review of the research on tax compliance decisions. We address traditional approaches to study compliance decisions and anomalies as well as the psychological determinants of compliance. Since different research methods reveal different results, we describe the arsenal of research methods and their strengths and weaknesses. We pay specific attention to results from process tracing approaches in tax compliance research. We conclude with practical implications for policymakers and researchers in the field.

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Hartmann, A.J., Mueller, M., Kirchler, E. (2020). Tax Compliance: Research Methods and Decision Processes. In: Zaleskiewicz, T., Traczyk, J. (eds) Psychological Perspectives on Financial Decision Making. Springer, Cham. https://doi.org/10.1007/978-3-030-45500-2_13

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This section contains research papers, publications, and other documents dealing with taxpayer compliance and burden research. You can learn about the tax gap, specific compliance analysis issues, and studies of the causes of compliance behavior, and the drivers of tax compliance burden. Below are links to the topics within this section, as well as some examples of what you can find within each topic.

The tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment gap.

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50+ Focused Taxation Research Topics For Your Dissertation

Published by Ellie Cross at December 29th, 2022 , Revised On May 2, 2024

A thorough understanding of taxation involves drawing from multiple sources to understand its goals, strategies, techniques, standards, applications, and many types. Tax dissertations require extensive research across a variety of areas and sources to reach a conclusive result. It is important to understand and present tax dissertation themes well since they deal with technical matters.

Choosing the right topic in the area of taxation can assist students in understanding how much insight and knowledge they can contribute and the tools they will need to authenticate their study. 

If you are not sure what to write about, here are a few top taxation dissertation topics to inspire you .

The Most Pertinent Taxation Topics & Ideas

• The effects of tax evasion and avoidance on and the supporting data
• How does budgeting affect the management of tertiary institutions?
• How does intellectual capital affect the development and growth of huge companies, using Microsoft and Apple as examples?
• The importance and function of audit committees in South Africa and China: similarities and disparities
• How taxation can aid in closing the fiscal gap in the UK economy’s budget
• A UK study comparing modern taxation and the zakat system
• Is it appropriate to hold the UK government accountable for subpar services even after paying taxes?
• Taxation’s effects on both large and small businesses
• The impact of foreign currencies on the nation’s economy and labour market and their detrimental effects on the country’s tax burden
• A paper explaining the importance of accounting in the tax department
• To contribute to the crucial growth of the nation, do a thorough study on enhancing tax benefits among American residents
• A thorough comparison of current taxes and the Islamic zakat system is presented. Which one is more beneficial and effective for reducing poverty?
• According to the most recent academic study on tax law, what essential improvements are needed to implement tax laws in the UK?
• A thorough investigation of Australian tax department employees’ active role in assisting residents of all Commonwealth states to pay their taxes on time.
• Why establishing a taxation system is essential for a country’s growth
• What is the tax system’s greatest benefit to the poor?
• Is it legitimate to lower the income tax so that more people begin paying it?
• What is the most significant investment made using tax revenue by the government?
• Is it feasible for the government to create diverse social welfare policies without having the people pay the appropriate taxes?
• How tax avoidance by people leads to an imbalance in the government budget
• What should deter people from trying to avoid paying taxes on time?
• Workers of the tax department’s role in facilitating tax evasion through corruption
• Investigate the changes that should be made to the current taxation system. A case study based on the most recent UK tax studies
• Examine the variables that affect the amount of income tax UK people are required to pay
• An analysis of the effects of intellectual capital on the expansion and development of large businesses and multinationals. An Apple case study
• A comparison of the administration and policy of taxes in industrialised and emerging economies
• A detailed examination of the background and purposes of international tax treaties. How successful were they?
• An examination of the effects of taxation on small and medium-sized enterprises compared to giant corporations
• An examination of the effects of tax avoidance and evasion. An analysis of the worldwide Panama crisis and how tax fraud was carried out through offshore firms
• A critical analysis of how the administration of higher institutions is impacted by small business budgeting
• Recognising the importance of foreign currency in a nation’s economy. How can foreign exchange and remittances help a nation’s finances?
• An exploration of the best ways tax professionals may persuade customers to pay their taxes on time
• An investigation of the potential impact of tax and accounting education on the achievement of the nation’s leaders
• How the state might expand its revenue base by focusing on new taxing areas. Gaining knowledge of the digital content creation and freelance industries
• An evaluation of the negative impacts of income tax reduction. Will it prompt more people to begin paying taxes?
• A critical examination of the state’s use of tax revenue for human rights spending. A UK case study
• A review of the impact of income tax on new and small enterprises. Weighing the benefits and drawbacks
• A comprehensive study of managing costs so that money may flow into the national budget without interruption. A study of Norway as an example
• An overview of how effective taxes may contribute to a nation’s development of a welfare state. A study of Denmark as an example
• What are the existing problems that prevent the government systems from using the tax money they receive effectively and completely?
• What are people’s opinions of those who frequently avoid paying taxes?
• Explain the part tax officials play in facilitating tax fraud by accepting small bribes
• How do taxes finance the growth and financial assistance of the underprivileged in the UK?
• Is it appropriate to criticise the government for not providing adequate services when people and businesses fail to pay their taxes?
• A comprehensive comparison of current taxes and the Islamic zakat system is presented. Which one is more beneficial and effective for reducing poverty?
• A critical evaluation of the regulatory organisations was conducted to determine the tax percentage on different income groups in the UK.
• An investigation into tax evasion: How do wealthy, influential people influence the entire system?
• To contribute to the crucial growth of the nation, conduct a thorough investigation of enhancing tax benefits among British nationals.
• An assessment of the available research on the most effective ways to manage and maintain an uninterrupted flow of funds for a better economy.
• The effect and limitations of bilateral and multilateral tax treaties in addressing double taxation and preventing tax evasion.
• Assess solutions: OECD/G20 Base Erosion and Profit Shifting (BEPS) project and explore the implications for multinational corporations.
• The Impact of Tax cuts in Obtaining Social, monetary, and Aesthetic Ends That Benefit the Community.
• Exploring the Effect of Section 1031 of the Tax Code During Transactions on Investors and Business People. 
• Investigating the role of environmental taxes and incentives in addressing global environmental challenges.
• Evaluating the impact of increased transparency on multinational enterprises and global efforts to combat tax evasion and illicit financial flows.
• Exploring the health and financial effects of a proposed policy to increase the excise tax on cigarettes.

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We hope that you will be able to write a first-class dissertation or thesis on one of the issues identified above at your own pace and submit a solid draft. If you wish to use any of the above taxation dissertation topics directly, you may do so. Many people, however, prefer tailor-made topics that meet their specific needs. If you need help with topics or a taxation dissertation, you can also use our dissertation writing services . Place your order now !

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How to find taxation dissertation topics.

To find taxation dissertation topics:

• Study recent tax reforms.
• Analyse cross-border tax issues.
• Explore digital taxation challenges.
• Investigate tax evasion or avoidance.
• Examine environmental tax policies.
• Select a topic aligned with law, economics, or business interests.

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Specialized tax research platforms & resources, learning tax research, federal tax statutes, federal legislative history, federal tax regulations, other irs guidance, u.s. tax court, u.s. department of justice -- tax division, treatises, books, and reporters, databases for finding tax-related scholarship (and other types of articles), specific tax journals, tax policy think tanks, online resources, other research guides, contact us, getting started.

This guide is designed to help you find laws and information on tax law issues. Although it focuses on U.S. federal tax law, it does include some information on state and local tax matters as well as some non -U.S. tax information. 

The purpose of this guide is to introduce you to a number of useful tax law resources and get you started in the right direction. Legal research requires analysis and synthesis of information, and no one resource will likely provide complete information or data on any given topic.

For many of these databases, you will need to use your Harvard Key to authenticate yourself as a Harvard or HLS-affiliate.  For others, you may need to register and create an account to gain access ( e.g. , Lexis, Westlaw, and Bloomberg Law).  If you have any trouble accessing a database, please contact the library.

In addition, you should consider looking at the following tax-centric research platforms/resources:

• Checkpoint (Thomson Reuters) Tax topics include federal, state, international, pension & benefits, estate planning, payroll, and more. Includes the US Tax Reporter (also available on Westlaw). NOTE: HLS-Affiliates (students, faculty & staff) can use the 1st link in the HOLLIS record for general access to Checkpoint (after providing their HLSMe credentials). If STUDENTS would like to create a personal account (to save searches, create alerts, etc.), they can do so by clicking on the 2nd link in the HOLLIS record. If FACULTY or STAFF would like to create a personal account, they should contact Lisa Lilliott Rydin at [email protected].
• Cheetah (Wolters Kluwer) Cheetah for Tax Law combines authoritative content, expert analysis, practice tools, and current awareness for legal tax professionals to gain insights on today’s most challenging tax matters. (Formerly known as Intelliconnect.) Includes the Standard Federal Tax Reporter Available online using the "View Online" link in the HOLLIS record above.
• TaxNotes - Federal Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
• Tax Notes - State Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
• Tax Notes - International Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
• IBFD - Tax Research Platform Global tax database, including country-specific tax guides, primary sources of law, tax treaties, global tax topics, books, journal articles and papers. Available online using the "View Online" link in the HOLLIS record above.
• Getting the Deal Through (Lexology) Not exactly a "research platform" but the Getting the Deal Through (GTDT) module of Lexology lets you quickly compare laws across different countries and includes such Topics as "State and Local Taxes," "Tax Controversy" and "Tax on Inbound Investment."
• Organisation for Economic Co-operation and Development (OECD) -- Tax Tax information, data, and other information regarding OECD member countries.
• European Commission -- Taxation and Customs Union Information on EU tax policies.

Below are some books that can help you better understand how Tax Law resources are organized and where you can find them.

• Federal Tax Research, by William A. Raabe KF241.T38 W47 2006x (Reference)
• Federal Tax Research: Guide to Materials and Techniques, by Gail Levin Richmond & Kevin M. Yamamoto KF241 .T38 R53 2018 (Reference)
• Federal Tax Research, by Joni Larson & Dan Sheaffer KF241 .T38 L37 2011 (Reference)

Primary Sources/Federal Government Resources

• U.S. Code (official U.S. federal government site) See "Title 26" for the Internal Revenue Code (a/k/a "The Code").
• U.S. Code (Legal Information Institute, at Cornell University) An alternative site for the U.S. Code (again, Title 26).

In addition to standard legislative history resources (e.g., ProQuest Congressional's Legislative Insight for federal legislative history), you should check out:

• Taxation & Economic Reform in America, Parts I & II (HeinOnline) This historical archive contains thousands of volumes and millions of pages of legislative history materials and other documents. It includes the complete Carlton Fox Collection which contains nearly 42 years of historical legislation related to the internal revenue laws from 1909-1950, as well as other legislative histories related to taxation, economic reform, and stimulus plans.
• The Joint Committee on Taxation's "Blue Book" Not exactly "legislative history".... At the end of each Congress, the Joint Committee Staff, in consultation with the staffs of the House Committee on Ways and Means and the Senate Committee on Finance, prepare explanations of the enacted tax legislation. The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, explanation of the provision, and effective date. Present law describes the law in effect immediately prior to enactment. It does not reflect changes to the law made by the provision or subsequent to the enactment of the provision. For many provisions, the reasons for change are also included.
• Old Editions of the Standard Federal Tax Reporter (HeinOnline) PDFs of the superseded, loose-leaf volumes (1917-1985).
• Code of Federal Regulations (official U.S. federal government site) Final IRS regulations can be found in Title 26 of the CFR. This compilation of regulations is updated annually, on a staggered basis.
• e-CFR An alternative site for final federal regulations (this compilation, while not "official" is more user-friendly and updated faster). Tax regulations still under "Title 26."

The Federal Register is where all federal agency rules and regulations are initially published (when first proposed -- perhaps re-proposed -- and later finalized). Agencies are required to include summaries of proposed regulations and the public comments received thereon, as well as an agency's reaction to the public comments when finalizing a regulation. This is typically done in the preamble to a finalized or re-proposed regulation.

• Federal Register The official government source for the Federal Register.
• FederalRegister.gov The Office of the Federal Register (OFR) of the National Archives and Records Administration (NARA), and the U.S. Government Publishing Office (GPO) jointly administer the FederalRegister.gov website. This website was developed to make it easier for citizens and communities to understand the regulatory process and to participate in Government decision-making.
• Internal Revenue Bulletins The Internal Revenue Bulletin (IRB) is the official publication for announcing Revenue Rulings, Revenue Procedures, Notices & Announcement. These are directed to all taxpayers and may be relied upon. The IRB is published weekly and through 2008 was consolidated into semi-annual Cumulative Bulletins (CB).

NOTE: IRS guidance/rulings requested by individual taxpayers ( e.g. , Private Letter Rulings, Technical Advice Memoranda, and Chief Counsel Advice) may not be relied upon by others and are not published in the IRB.

Nevertheless, they may provide insight regarding the IRS's views on various matters. They may be obtained by the public via FOIA requests and can often be found on the IRS.gov (see the IRS's FOIA Library ) or by using commercial legal research platforms.

The IRS website  is not the easiest site to navigate but it does contain a lot of useful information. For example:

• Understanding IRS Guidance -- A Brief Primer Explains the difference between Regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, Technical Advice Memoranda, Notices, and Announcements.
• Forms, Instructions, and Publications IRS Publications (on a variety of tax topics) and the Instructions to IRS Forms can often help you understand the IRS's view of tax laws. Keep in mind that these are NOT primary sources of law; however, they can be helpful.
• Tax Code, Regulations, and Official Guidance NOTE: It appears this information is no longer being updated by the IRS; however, you may be able to find useful historical information.
• Basic Tools for Tax Professionals A collection of IRS links likely to be of use to a tax professional, including a link to the Internal Revenue Manual.
• Internal Revenue Manual How the IRS is organized and how it operates. For example, procedures for examining returns, conducting audits, "Offers in Compromise," technical guidelines, etc.
• Tax Statistics Here you will find a wide range of tables, articles, and data that describe and measure elements of the U.S. tax system.
• Tax Topics Source for general individual and business tax information.
• FAQs Frequently Asked Questions (and their answers).
• U.S. Tax Court Website The official website of the U.S. Tax Court, containing information about the court and its cases.
• US Dept. of Justice -- Tax Division Website The Tax Division’'s mission is to enforce the nation’'s tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law.

Secondary Sources

Look under "Secondary Sources" (or "Secondary Materials") in the Tax Practice Center/Area of a legal research platform to find treatises and other materials about tax-related topics. Below are some specific titles:

• Mertens Law of Federal Income Taxation Available online via Westlaw using the link above.
• Bittker, McMahon & Zelenak: Federal Income Taxation of Individuals KF6369 .B5722 Also available online via Westlaw using the link in the HOLLIS record above.
• Bittker & Eustice's Federal Income Taxation of Corporations and Shareholders KF6464 .B53x (Available in the Reading Room Stacks and on Reserve at the Circulation Desk) Also available online via Westlaw and Checkpoint using the "View Online" link in the HOLLIS record above.
• Hill and Mancino: Taxation of Exempt Organizations Available online via Checkpoint.
• Saltzman & Book: IRS Practice & Procedure KF6300 .S262x Also available online via Westlaw and Checkpoint.
• Tax Fraud and Evasion: Offenses, Trials, Civil Penalties (Vol. 1) Available online via Checkpoint.
• Tax Fraud and Evasion: Money Laundering, Asset Forfeiture, and Related Topics (Vol. 2) Available online via Checkpoint.
• Standard Federal Tax Reporter (Cheetah) A Code section-arranged reporter covering Federal income tax law that allows you to navigate between its component parts. The full text of an IRC section, with brief legislative history notes, is followed by the relevant committee reports in full text, final, temporary and proposed regulations, editorially prepared explanations, and annotations. Caution lines and notes are used to alert you to special circumstances concerning a Code section, regulation or annotation. Also included are practice aids, tax rates and other tables, a tax calendar and separate tax planning sections for individuals and businesses, as well as full-text IRS documents (regulations, revenue rulings and procedures), case annotations and other source documents for the current year.
• U.S. Tax Reporter (Checkpoint) On Checkpoint's Home Page, look for "USTR Code Section" (under "My Quick Links"). Another Code section-arranged reporter that provides a comprehensive, up-to-date source of federal tax law, including the Internal Revenue Code, regulations, committee reports, cases, rulings, explanations, and annotations of cases and rulings. Also available online via Westlaw.
• Understanding Federal Income Taxation, by J. Martin Burke & Michael K. Friel KF6369.85 .B87 2019 (Available in the Reading Room Stacks and the Study Guide Collection @ the Circulation Desk)
• Chirelstein's Federal Income Taxation: A Law Student's Guide to the Leading Cases and Concepts KF6369 .C43 2018 (Reserve)

In addition to searching for tax-related law reviews and journals using Westlaw , Lexis Advance , or Bloomberg Law you can try these alternatives:

• HeinOnline's Law Journal Library Browse by Subject and select "Taxation" to see all the tax-related journals you can search.
• Business Source Complete A database of citations to summaries and full text articles from academic journals, magazines, and trade publications.
• ProQuest's Accounting, Tax & Banking Collection This database brings together highly ranked global and scholarly journals with other key resources for locating quick and precise results covering current news and topics, as well as the trends and history influencing important financial issues of the day.
• SSRN (Social Science Research Network) SSRN is a worldwide collaborative of over 352,400 authors and more than 2.2 million users that is devoted to the rapid worldwide dissemination of research. It provides access to new scholarship including working papers.
• NBER Working Papers The National Bureau of Economic Research is a private, nonprofit, nonpartisan research organization based in Cambridge, Massachusetts.
• Journal of Taxation HJ 2360 .J6 Available online via Westlaw and Checkpoint.
• Tax Law Review K24 .A917 Available online via Westlaw & Lexis Advance.
• The Tax Lawyer (ABA Publication) Available online via Westlaw & Lexis Advance.
• Corporate Taxation Available online via Checkpoint.
• Taxation of Exempts Available online via Checkpoint.

Current Awareness

• Daily Tax Report Available online via Bloomberg Law using the "View Online" link in the HOLLIS record above.
• Tax Notes Available online using the "View Online" link in the HOLLIS record above. NOTE: You must first create an account using an HLS-networked computer. This can be done on-campus or remotely by using a VPN connection.
• Law360 - Tax Requires HLSMe Authenticiation.
• IRS's e-News for Tax Professionals Information on how to subscribe to get the IRS's latest news.
• Politico's Morning Tax Newsletter Subscribe to a daily newsletter.
• International Tax News PWC's International Tax News provides a succinct monthly analysis of select legislative changes, case law and treaty news from around the globe.
• American Tax Policy Institute (ATPI) ATPI supports nonpartisan scholarly research, analysis and discussion of U.S. federal, state and local, and international tax policy issues.
• Tax Foundation The Tax Foundation is the nation’s leading independent tax policy nonprofit. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity.
• Tax Policy Center (TPC) The Urban-Brookings Tax Policy Center aims to provide independent analyses of current and longer-term tax issues and to communicate its analyses to the public and to policymakers in a timely and accessible manner. The Center combines top national experts in tax, expenditure, budget policy, and microsimulation modeling to concentrate on overarching areas of tax policy that are critical to future debate.
• TaxProf Blog
• Tax Appellate Blog (Miller & Chevalier) The Tax Appellate Blog is intended to be a resource for information on important tax cases under consideration in the appellate courts. It will feature insightful commentary on the issues and provide a dedicated site for following the progress of these cases.
• Procedurally Taxing Procedurally Taxing considers developments in issues relating to tax procedure and tax administration.
• Tax Controversy Watch (Blank Rome LLP) Blank Rome’s Tax Controversy Watch blog is focused on addressing and providing a comprehensive review of the latest developments in the tax controversy field.
• TaxVox (Tax Policy Center)

State Tax Resources

Individual state tax agencies can provide a lot of helpful state tax information. The Federation of Tax Administrators provides a list of links to the websites for state tax agencies.

You can also find a number of state-specific tax resources if you look for state law content  on Lexis Advance or Westlaw.

See below for more useful links:

• All States Tax Guide (RIA) Available via Westlaw using the link above.
• Bender's State Taxation: Principles and Practice Available online via Lexis Advance using the link above.
• Hellerstein & Hellerstein: State Taxation (WG&L) Available online via Westlaw and Checkpoint using the link above.
• Tax Foundations's Center for State Tax Policy The Tax Foundation’s Center for State Tax Policy produces and markets timely and high-quality data, research, and analysis on state fiscal issues that influence the debate toward economically principled tax policies.
• NYU Conference on State and Local Taxation Each December the biggest names in state and local taxation gather in New York City and offer presentations on cutting-edge issues to their fellow practitioners at the New York University Institute on State & Local Taxation. The speakers then develop their presentations into law review-quality articles, published by Matthew Bender. Though scholarly, the articles are also very practical, laden with examples, tax-planning tips, and commentary.
• Bloomberg Law's Tax Practice Center Select the "State" tab at the top for a collection of state tax resources. In particular, the "State Tax Portfolios" and various "Chart Builders."
• Checkpoint (Thomson Reuters) In addition to state tax law resources, see the "Create-a-Chart" Tool.

Other Resources

Below are some other Research Guides you may find useful, depending on your area of research:

• Federal Tax Research (NYU Law Library) A ton of resources across a broad range of tax-related topics. See tabs for "Statistics," "Foreign & International Tax," "Dictionaries, Directories, & CRS Reports," and more.
• Foreign and International Tax Law Research (NYU Law Library)
• International and Foreign Tax Law Research Guide (Georgetown Law Library)
• History of the U.S. Income Tax (Library of Congress)

NOTE: When using a research guide prepared by a different library, the links may not work for you. However, if you find a title of interest, you may be able to locate it in our collection by using HOLLIS (Harvard's Library Catalog). If not, we may be able to obtain the resource through  BorrowDirect or Interlibrary Loan .

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• CAMPUS TO CLIENTS

Practice and policy insights from academic tax research

• Practice Management & Professional Standards
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Editor: Annette Nellen, Esq., CPA, CGMA

In the continued spirit of bridging the gap between tax academics and tax practitioners, for the third year in a row, this column features examples of published academic tax research (see Meade, “ Campus to Clients: Academic Research for Your Practice Consideration ,” 52  The Tax Adviser  526 (August 2021), and Meade, “ Campus to Clients: Practitioners Can Benefit From Academic Tax Research ,” 51  The Tax Adviser  532 (August 2020)). The papers were selected by the External Relations Committee of the American Taxation Association (ATA) with the aim of sharing research that is relevant and of interest to practitioners. The ATA is the leading organization of tax academics, and the External Relations Committee aims to connect with tax professionals.

The five articles selected for this column highlight the wide breadth of topics and methodologies found in academic tax literature. Topics within academic tax literature that may be of interest to practitioners include tax policy, corporate and individual taxpayer behavior, effects of tax on stakeholders, tax accounting issues, and tax data analysis. Researchers provide valuable guidance on tax policy by providing insight on potential policy changes as well as feedback on existing policy.

Many academic tax papers examine corporate behavior using publicly available data such as annual reports, stock prices, rankings, and other sources of information. Studies of individual taxpayers are also common, with researchers conducting experiments or developing creative uses of public data. Federal, state, and international tax issues are often examined, as well as the impact of nontax developments on tax policy and behavior.

As with most academic research, these five articles were subject to a rigorous development and review process as outlined in the earlier columns. Researchers generally get input from peers on their “working paper” by presenting their thesis, approach, and initial findings at campus forums and conferences such as those sponsored by the American Accounting Association (AAA). Most articles undergo thorough blind peer review. Reviewers often call for some revisions, such as for clarification or deeper analysis, for the paper to be accepted for publication. The academic publishing world is often harsh, as many papers are rejected under these rigorous standards for research approach, content, novelty, and timeliness.

Of the articles summarized here, one was in a tax-specific journal, while the others come from broader accounting journals, including one focused on accounting history.

‘The Effects of Income Tax Timing on Retirement Investment Decisions’

Withdrawals from a tax-deferred (i.e., traditional) individual retirement account (IRA) or 401(k) are taxable, making the account’s after-tax value less than the nominal value appearing on a quarterly or annual account statement. This future tax liability’s salience is weak for most individuals, which may cause them to overestimate their after-tax retirement savings. Roth IRA accounts are not affected in this way because withdrawals from them generally are tax-free.

In their article published in the March 2021 issue of  The Accounting Review  (Vol. 96, Issue 2), Shane Stinson, Marcus Doxey, and Timothy Rupert hypothesize that individuals’ inclination to overestimate a tax-deferred account’s after-tax value may cause them to believe that it will be easier to meet their future cash flow needs than is the case. Such an individual therefore may see less of a need to generate a higher return than does an individual holding a Roth account with the same after-tax value, so investments held in tax-deferred accounts may be lower-risk, and thus lower-return, than investments held in Roth accounts.

The authors conducted an experiment to test this hypothesis. Participants allocated an account’s balance between two investments, where one of them had lower risk and a lower expected return than the other. Some participants had a tax-deferred account, while others had a Roth account. The two types of accounts had similar after-tax values. After controlling for participants’ risk preferences, the authors found that, compared with Roth account holders, tax-deferred account holders had higher estimates of their future after-tax balances, allocated more of their account to the lower-risk, lower-return investment, and perceived less difficulty in meeting their after-tax goal for retirement savings. These results are consistent with the authors’ hypothesis.

Additional parts of the experiment tested whether various interventions mitigate individuals’ inclination to take on less risk with a tax-deferred account. The authors found that tax-deferred account holders allocated more of their savings to higher-risk, higher-return investments when their retirement savings goal was stated in pretax dollars, when they had to estimate their final tax liability, and when they were given feedback about their progress toward saving for retirement. The authors also found that the effect was stronger when multiple interventions were applied simultaneously. Tax advisers and financial planning professionals are well positioned to provide such interventions, and the results of the authors’ experiment suggest that the interventions will have beneficial effects.

‘The Possible Weakening of Financial Accounting From Tax Reforms’

The objective of financial accounting is to provide information about a firm’s economic performance to shareholders and other external stakeholders. The objective of the federal income tax is to raise revenue and to provide various economic incentives to taxpayers. Because these objectives differ, a firm’s book income, which is determined under financial accounting rules, sometimes is greater than its taxable income, which is determined under tax law. This outcome can seem inappropriate to many taxpayers. Several proposals have been made in recent years to more closely link taxable income to book income, and the recently enacted Inflation Reduction Act of 2022, P.L. 117-169, includes a 15% minimum tax for large corporations that is based on adjusted financial statement income.

In her Presidential Scholar address to the AAA, which was published in the September 2021 issue of  The Accounting Review  (Vol. 96, Issue 5), Michelle Hanlon discusses several issues that are pertinent to such proposals. She notes that there could be full linkage, where book income is used as taxable income. There instead could be partial linkage, such as the business untaxed reported profits (BURP) adjustment that applied in the latter 1980s. Hanlon notes that the implementation of partial or full linkage is more complicated than many people realize because of such issues as net operating losses and controlled foreign corporations.

Hanlon reviews research on the financial reporting effects of linking book income and taxable income, such as during the BURP adjustment’s brief life and international differences in book-tax linkages. The evidence generally indicates that firms are more likely to alter their financial reporting to attain tax objectives when book-tax linkages are stronger, and this leads to a book income that is less informative for capital market participants. While these research results are not surprising to accountants, they seem to be underappreciated by the economists and lawyers who advise policymakers. Hanlon notes that there is not much research on these financial reporting effects and advocates for more of it.

Hanlon concludes that linking taxable income more closely to book income would be unwise because it likely would impair the quality of financial reporting. The capital market costs of such impaired quality are not easy to discern but are nonetheless real. In addition, increased book-tax linkages could tempt Congress to play a stronger role in financial reporting standard setting because of the tax effects. Whether or not one agrees with Hanlon’s conclusions, her discussion of the pertinent issues does an excellent job of better educating the reader about them.

‘Transparency and Tax Evasion: Evidence From the Foreign Account Tax Compliance Act (FATCA)’

The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 (as part of the Hiring Incentives to Restore Employment Act, P.L. 111-147) to limit U.S. individuals’ ability to evade U.S. tax through the use of offshore accounts. The act requires automatic information transfers to the IRS about foreign account and cross-border payments by foreign financial institutions (FFIs). Prior to FATCA, FFIs were subject to self-reporting requirements under the qualified intermediary program established in 2001. The IRS estimated that $458 billion of annual offshore income was unreported in the years leading up to the passage of FATCA (IRS, “ The Tax Gap — Tax Gap Estimates for Tax Years 2008–2010 ”).

In their 2020 article in  The Journal of Accounting Research  (Vol. 58, Issue 1), Lisa DeSimone, Rebecca Lester, and Kevin Markle examine how U.S. individuals responded to the passage of FATCA. The shift from self-reporting under the prior rules to automatic third-party reporting increased the perceived and actual risk of detection, which should reduce the level of tax evasion. However, the costs of evasion could remain below the tax savings from the use of offshore accounts, resulting in continued evasion through such accounts.

The actual amount of hidden offshore assets held by U.S. investors is unobservable. To measure the effects of FATCA, the study uses “round-tripping” behavior, in which assets hidden in foreign accounts are invested back in the United States. Specifically, foreign portfolio investment by individual investors into the United States from tax havens, relative to other countries, measures the inbound investment part of the “round trip.” The amount of inbound equity investment to the United States from tax havens declined by $7.8 billion to $15.3 billion in the years following FATCA, consistent with U.S. investors’ moving financial assets out of tax havens following the rule change.

To avoid FATCA, U.S. citizens may renounce their citizenship. The authors observed a large increase in expatriations following FATCA. Investments in alternative investments that are not subject to FATCA appear to have increased following FATCA, specifically, European collective investment vehicles, real estate, and art. Taken together, these results show U.S. individuals’ behavior regarding investment location and allocation decisions changed in response to FATCA.

The study highlights an intended consequence of FATCA, specifically, the reduction of the use of offshore accounts in tax havens to avoid U.S. tax. While this is considered progress, the use of offshore accounts for tax evasion remains. As with many tax rules, unintended consequences have also been observed, in that U.S. citizens avoid the FATCA requirements in a variety of ways, including renouncing their citizenship and investing in assets not subject to FATCA. These are important considerations for policymakers moving forward with third-party reporting regimes.

‘SALTy Citizens: Which State and Local Taxes Contribute to State-to-State Migration?’

Although there are many reasons for people to relocate across state lines, it is an open question whether, how much, and which type of taxes affect individuals’ decisions on which state to reside in. In their 2021 article in  The Journal of the American Taxation Association  (Vol. 43, Issue 1), Amy M. Hageman, Sean W.G. Robb, and Jason M. Schwebke study the impact of taxes on location decisions by specifically investigating which state and local taxes are most associated with state-to-state movement of individuals.

Several studies have considered the relationship between taxes and state migration, with mixed results and limited sample composition. For example, one study (Young and Varner, “Millionaire Migration and State Taxation of Top Incomes: Evidence From a Natural Experiment,” 64  National Tax Journal  255 (2011)) found little evidence that taxes have any effect on the change in migration patterns for millionaires within New Jersey. However, another study (Cebula, “Migration and the Tiebout-Tullock Hypothesis Revisited,” 68  American Journal of Economics and Sociology  541 (2009)) concludes that people tend to be attracted to lower state income and property tax burdens.

The authors examine the tax-effect question by hypothesizing that there will be a greater decrease in population in states that have a higher overall burden of death/gift, sales, and property taxes. They test their hypotheses by using regression models that separately compare the net migration at the state level against each of the tax burdens. They find that states with higher taxes tend to be associated with greater out-migration. They also find, when combining all the tax burdens into one model, that property and some types of sales (selective sales) taxes are the most significant. When examining the economic impact on migration from these two taxes, they find that a one-standard-deviation increase in net migration is associated with a $12.99 and $126.73 per capita decrease in selective and property taxes, respectively, collected.

State and local policymakers would find this paper of interest as they consider the degree and type of taxation levied on residents. It is important to have the revenues to fund services and projects but at the same time recognize that an increase in taxes is associated with a decrease in overall tax participants. This paper provides some quantitative analysis that can help determine the right mix of taxes and services. Further, businesses can use this information when they consider where to locate operations to best attract talent and employees.

‘Six Decades of US Tax Reform: Why Has the Average Couple’s Tax Burden Increased?’

The IRS and many other federal and state offices and agencies collect a lot of data, typically reported as raw data, such as how many returns are filed by individuals within various income ranges. What is not always seen is a lot of analysis of this data in ways that provide insights into historical trends and possible improvements to the laws to which the data relates.

In a 2021 article published in the  Accounting Historians Journal  (Vol. 48, No. 2), James M. Plečnik and Shan Wang report on their findings from research and tax calculations performed for 1955 through 2018. The researchers reviewed the tax laws applicable to a hypothetical median-income married couple with no dependents and income beyond eligibility for the earned income tax credit. This research involved finding the standard deduction, personal exemption, married-filing-jointly tax rate structure, and any special temporary relief provided to individuals, all for over 60 years. They also researched payroll tax information for the years under review. U.S. Census Bureau data was used to determine the median income for the couple, which ranged from $4,421 in 1955 to $80,663 in 2018.

With this income and payroll tax information (for both employee and employer, after tax), the researchers measured for all years the effective income tax rate (EITR) and the effective tax rate (ETR). The ETR includes both income and payroll taxes borne by the median-income couple. The authors found that the EITRs have decreased but ETRs have increased. They also observe that federal tax collections relative to GDP have been mostly constant over the past decades. They conclude that with payroll taxes included in the ETR analysis, there is a higher overall tax burden for the middle-class demographic studied.

The findings are a good reminder that employees bear federal taxes beyond what is reported on their Form 1040,  U.S. Individual Income Tax Return , and how a distorted picture results for taxpayers and policymakers when the somewhat hidden payroll taxes are omitted from reports on tax incidence and ETRs. The article also includes interesting lists of the major individual tax changes enacted during each presidency from that of Dwight Eisenhower to Donald Trump’s.

Practice relevance

The five articles summarized here are a small portion of the tax research produced by tax faculty annually. When practitioners visit campuses or otherwise interact with faculty, we encourage them to ask faculty about their research. Academics will benefit from additional insights into how that research relates to practice, and we believe practitioners will gain insights that can help in their planning and advocacy work.

Contributors

David Hulse,  Ph.D., is an emeritus professor at the University of Kentucky in Lexington, Ky.;  Kerry Inger,  CPA, Ph.D., is an associate professor at Auburn University in Auburn, Ala.;  Annette Nellen,  Esq., CPA, CGMA, is a professor in the Department of Accounting and Finance at San José State University in San José, Calif., and is a past chair of the AICPA Tax Executive Committee; and  Mitchell Oler,  CPA, Ph.D., is a department chair and associate professor at the University of Wyoming in Laramie, Wyo. For more information about this column, contact  [email protected] .

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Tax research methodology: a guide to tax research techniques.

Introduction – Tax Research Methodology

In order to properly optimize your accounting firm’s overall efficiency, efficiency, effectiveness, and productivity in connection to researching and resolving a tax issue and determining the sustainability of the tax return filing position per Circular 230, the appropriate tax research processes must be meticulously designed, implemented, and executed. The subsequent comprehensive steps will guide you in establishing an all-inclusive tax research effort on behalf of your entire client base while properly ascertaining the likelihood of success should a tax position(s) taken on a tax return be challenged by the Internal Revenue Service (hereinafter the “Service”) upon examination.

Establish The Facts And Circumstances

The first step in the tax research process is to establish all the facts and circumstances provided by your client in order to determine which tax laws apply to your client’s fact pattern. At this initial stage, it is imperative not to omit nor overlook any of your client’s facts and circumstances whether appearing material or immaterial. Always be guided by the axiom that facts and circumstances appearing to be immaterial individually may, in fact, be material in the aggregate.

Determine All the Issues

The second step in the tax research process entails determining all the tax issues affecting your client’s specific facts and circumstances and any and all mitigating factors. Normally, complex tax issues evolve through several stages of development. For instance, an experienced tax professional based upon his or her prior knowledge of the tax laws, can normally determine most of the initial pertinent issues in terms of general tax laws. However, after performing an initial search of the authorities to answer the initial issues, a tax professional often discovers that one or more additional specific technical questions of interpretations must be resolved before the initial issues can be fully addressed. Consequently, at this stage, a tax professional may also encounter the need to obtain additional facts from the client. Accordingly, the tax research process may have to move back from step two to step one. In addition, you the tax professional may learn at this stage that facts initially not considered to be important may in fact prove critical to the resolution of all your client’s tax issues.

Identify Statutory, Administrative, And Judicial Authority

The third step in the tax research process entails identifying the specific authorities to support all of your client’s tax issues while appropriately weighing authorities that may be contrary to your supporting position. Generally, this process begins with consulting statutory authority (e.g., the Internal Revenue Code) and quickly expands to encompass administrative authority (e.g., Proposed Treasury Regulations, Temporary Treasury Regulations, Final Treasury Regulations, Revenue Rulings, Revenue Procedures, Private Letter Rulings, Technical Advice Memorandum, General Counsel Memorandum, Chief Counsel Advice Memorandum, Circular 230, Internal Revenue Manual, Internal Revenue Bulletins, IRS Field Service Advice Memorandum, IRS Determination Letters, and IRS Notices, etc.) and judicial authority (e.g., judicial interpretations decided by the U.S. Tax Court, the U.S. District Court, the U.S. Court of Federal Claims, the U.S. Circuit Court of Appeals, the U.S. Court of Appeals for the Federal Circuit, and the U.S. Supreme Court). In addition, at times, you the tax professional may have to consult the legislative history (e.g., the Public Laws and Congressional Committee Reports from the House of Representatives and the Senate) of a particular Internal Revenue Code section to fully address what Congress’s intent was in passing a particular bill. Lastly, you may also want to consult the voluminous range of editorial interpretations (e.g., published white papers, published articles, etc.) available to assist in the interpretation a particular tax issue. However, it must be duly noted that editorial interpretations are impermissible sources of authority before the Service and the judicial system. For clarification purposes, the subsequent synopsis will elaborate upon the aforementioned statutory, administrative, and judicial interpretations:

Statutory Authority

The Internal Revenue Code

All federal level tax statutes passed by Congress into law are compiled and published in Title 26 of The United States Code. As it should be recalled, Title 26 of The United States Code contains the specific statutes that authorize the Service to collect taxes for the federal government. Generally, the tax research process begins with consulting the Internal Revenue Code and quickly expands to encompass administrative and judicial authorities based upon the complexity of the tax issue under analysis.

Administrative Authority

The Treasury Regulations

The Treasury Regulations provide the official interpretations of the Internal Revenue Code by the Treasury Department and have the force and effect of law. The most common forms of Treasury Regulations include:

• Proposed Treasury Regulations (e.g., binding only on the Service and not the taxpayers);
• Temporary and Final Treasury Regulations (e.g., binding on both the Service and the taxpayers); and
• Preambles  (e.g., treated just like legislative histories to demonstrate congressional intent and may underlie either type of the aforementioned treasury regulations regardless of status as Proposed, Temporary, or Final).

Revenue Rulings

A Revenue Ruling is an official interpretation by the Service of the tax laws. Initially, Revenue Rulings are published in the weekly Internal Revenue Bulletin. The same rulings later appear in the permanently bound Cumulative Bulletin, a semi-annual publication of the Government Printing Office. Revenue Rulings hold less weight than the Treasury Regulations because they are intended to cover only specific fact patterns. Regardless, Revenue Rulings can provide valid precedent but only if your client’s facts and circumstances are substantially identical.

Revenue Procedures

A Revenue Procedure is a statement of procedure that affects the rights or duties of taxpayers or other members of the public under the Code. Similar to Revenue Rulings, Revenue Procedures are less authoritative than Treasury Regulations. However, Revenue Procedures should be binding on the Service and may be relied upon by taxpayers.

Private Letter Rulings

Private Letter Rulings (hereinafter “PLR”) are issued directly to taxpayers who formally request and pay for advice about the tax consequences applicable to a specific business transaction. Such PLR request have been employed frequently by either taxpayers themselves or the taxpayer’s representatives (e.g., a taxpayers’ representation through a CPA Firm or Law Firm) to assure themselves of a pre-planned tax result before they consummate a transaction and as a subsequent aid in the preparation of the tax return’s filing position. When the IRS issues a PLR it is understood that the PLR is limited in scope and application to the taxpayer making the request.

Technical Advice Memorandum

A Technical Advice Memorandum (hereinafter “TAM”) is a special after-the-fact ruling that may be requested from the taxpayer or the technical staff of the Service. For instance, if a disagreement arises in the course of an audit between the taxpayer or the taxpayer’s representative and the revenue agent, either side may request formal technical advice on the issues(s) through the District Director. Under certain circumstances, TAM’s can be used as a basis for the issuance of a Revenue Ruling and can also be subsequently published as a PLR.

General Counsel Memorandum

General Counsel Memorandum (hereinafter “GCM”) are legal memorandum that are prepared by the IRS Chief Counsel’s Office. GCM’s analyze proposed Revenue Rulings, Private letter Rulings, and Technical Advice Memorandum. GCM’s that were issued after 1981 constitute substantial authority for purposes of the penalty assessed for the substantial understatement of income tax.

Circular 230

Circular 230 is an IRS publication that sets forth the requirements and responsibilities of professionals (e.g., Attorneys, Certified Public Accountants, Enrolled Agents, and Enrolled Actuaries) admitted to practice before the Service.

Internal Revenue Manual

The Internal Revenue Manual (hereinafter “IRM”) is an official compilation of policies, procedures, instructions, and guidelines for the organization, function, operation and administration of the Service. It is not legally binding, and the policies are not mandatory. The IRM guidelines do not confer any rights on taxpayers.

IRS Field Service Advice

IRS Field Service Advice (hereinafter “FSA”) are taxpayer specific rulings furnished by the IRS National Office in response to requests made by the taxpayers or IRS Officials.

IRS Determination Letters

A Determination Letter is issued by the IRS at the taxpayer’s request to outline the Service’s position on a particular transaction that has already been completed. Generally, Determination Letters are issued only when a determination can be made on the basis of clearly established rules in the statute or regulations.

IRS Notices

When prompt guidance concerning an item of the tax law is needed, the IRS publishes notices in the Internal Revenue Bulletin. These notices are intended to be relied upon by the taxpayers to the same extent as a Revenue Ruling or Revenue Procedure.

Judicial Authority

U.S. Tax Court

The U.S. Tax Court is an independent 19 judge federal administrative agency that functions as a court to hear appeals by taxpayers from adverse administrative decisions by the Service.

U.S. District Court

The U.S. District Court hears civil actions against the United States for the recovery of any tax alleged to have been erroneously or illegally assessed or collected by the Service. Trial by jury is available at the preference of either the petitioner or defendant.

U.S. Court of Federal Claims

The U.S. Court of Federal Claims is a Washington D.C. based appellate-level court in which a taxpayer may sue the government for a refund of overpaid taxes.

U.S. Circuit Court of Appeals

The U.S. Court of Appeals is one of thirteen courts including the District of Columbia and the Federal Circuit Courts, to which appeals from a trial court, such as the U.S. Tax Court, are directed.

U.S. Court of Appeals For The Federal Circuit

The U.S. Court of Appeals for the Federal Circuit hears appeals from the U.S. Court of Federal Claims.

U.S. Supreme Court

The U.S. Supreme Court is the highest appellate court in the federal court system and in most states. The U.S. Supreme Court, under its certiorari procedure authority, reviews the constitutionality of a tax law and a small number of tax decisions by the Court of Appeals.

The subsequent chart illustrates the geographic boundaries of The United States Courts of Appeals and the United States District Courts:

Resolve the Issues

The fourth step in the tax research process entails the resolution of your client’s tax issues after identifying, analyzing, and interpreting all of the applicable authorities. It cannot be overstated that you should have provided, as needed, reasonable statutory, administrative, and judicial support to demonstrate that your tax return filing position could be upheld if challenged by the Service upon the fruition of an examination and that you exercised due diligence and acted in good faith. Furthermore, at times, positions taken on tax returns may need to be disclosed on Form 8275 entitled “Disclosure Statement” or Form 8275-R entitled “Regulation Disclosure Statement” depending upon the complexity and controversial nature of the tax issue. Noting, by disclosing positions on your client’s tax returns you may be able to avoid paid preparer penalties should your position be disallowed and avoid the application of the six-year statutory period for assessment under I.R.C. § 6501(e).

From a risk management perspective, in order to mitigate or avoid income tax return paid preparer penalties pursuant to I.R.C. § 6694 (e.g., penalties that are assessed on both paid tax return preparers and tax advisers that are deemed paid tax return preparers due to their consulting on matters that constitute a substantial portion of their client’s tax returns even if they were not engaged to prepare nor review the tax return), a “More-Likely-Than-Not” standard should be satisfied.

The subsequent standards of the applicable levels of opinions should be scrupulously analyzed when assessing your tax return filing position:

• “Will” Standard: Generally, a 95% or greater probability of success if challenged by the IRS. A “Will” opinion generally represents the highest level of assurance that can be provided by an opinion;
• “Should” Standard: Generally, a 70% or greater probability of success if challenged by the IRS. A “Should” opinion provides a lower level of assurance than is provided by a “Will” opinion, but a higher level of assurance than is provided by a “More-Likely-Than- Not” opinion;
• “More-Likely- Than- Not” Standard: A greater than 50% probability of success if challenged by the IRS. The “More-Likely-Than-Not” standard is the highest level of accuracy required for purposes of avoiding the accuracy-related penalties under I.R.C. 6662A;
• “Substantial Authority” Standard: Typically, greater than a “Realistic Possibility of Success” standard and lower than “More-Likely-Than-Not” standard (i.e., 40% probability of success);
• “Realistic Possibility of Success” Standard: Approximately a one-in-three or greater possibility of success if challenged by the Service;
• “Reasonable Basis” Standard: Significantly higher than the “Not Frivolous” standard (i.e., that is, not deliberately improper) and lower than the “Realistic Possibility of Success” standard. The position must be reasonable based on at least one tax authority that can be cited as valid legal authority;
• “Non-Frivolous” Standard: Approximately a 10% chance of being upheld upon examination by the Service and accordingly under no circumstance should a tax professional ever render services with this level of comfort; and
• “Frivolous” Standard: Approximately a percentage less than a 10% chance of being upheld upon examination by the Service and accordingly under no circumstances should a tax professional ever render services with this level of comfort.

It should be duly noted that each of the aforementioned standards above has a relevant meaning to both the taxpayers and tax professionals when evaluating a tax position and the related disclosure requirements. Noting, the percentages listed for “More-Likely-Than-Not” and “Realistic Possibility of Success” are specifically provided for and discussed in the treasury regulations. In contrast, the percentages for “Substantial Authority”, “Reasonable Basis”, “Non-Frivolous”, “Frivolous” have been developed based upon their relative importance in the hierarchy of standards of opinion as principally provided for in congressional committee reports. Moreover, while not mathematically calculable, the percentages are still practical in demonstrating the relative strength of one level as opposed to another level.

Communicate With Your Client

The fifth and final step in the tax research process entails communicating the conclusion to your client. Your client, of course, must ultimately make the final decision concerning what course of action to take, even though the client’s decision is guided by and often dependent upon the conclusions reached by you, the tax professional. It is strongly recommended that this tax advice be rendered to your client in a written format, as opposed to verbal communication, and preferably in a formal tax advice memorandum format (e.g., Facts & Circumstances Section; Issue(s) Section; Analysis Section; and Conclusion Section) meticulously discussing the applicable statutory, administrative, and judicial authority to suitably document your due diligence in assessing the tax issues(s) and resolving them satisfactorily to reach a strong tax return filing position (e.g., “More-Likely-Than-Not”, “Should”, “or “Will” filing positions). Finally, caveat language in the form of a disclaimer should be documented within the tax advice memorandum for any areas of the tax law that were not within the scope and application of your tax research analysis (e.g., the scope and application of our tax advice memorandum is in connection to the U.S. Federal-Level tax consequences only and does not provide any advice or analysis in connection to any U.S. Multi-State tax consequences nor any advice in connection to Financial Statement Reporting Standards under United States GAAP nor International Financial Reporting Standards).

By following the preceding all-inclusive practical steps in the tax research process you should be able to render your tax research services to your entire client base in a more efficient, effective, and productive manner while adequately weighing risk management concerns in connection to the sustainability of tax return filing positions. As a final reminder, the guidance contained in this article should be applied with due professional care including seeking further professional advice from a subject matter expert should it be deemed warranted based upon both the complexity and contentious nature (e.g., taking a tax position contrary to a Treasury Regulation on Form 8275-R, etc.) of the tax matter under review.

Have a question? Contact Peter J Scalise , Prager Metis, New York.

About the Author Peter J. Scalise serves as the National Partner-in-Charge of the Federal Tax Credits and Incentives Practice at SAX CPAs LLP. Peter is a highly distinguished member of the Accounting Today Top 100 Influencers and has approximately thirty years of progressive Big 4 and Top 100 public accounting firm experience developing, managing, and leading large scale tax advisory practices on a regional, national, and global level. Peter also serves as a passionate philanthropist and a member of several Boards of Directors and Boards of Advisors for local, regional, and national charities in connection with poverty and hunger alleviation; economic development; environmental conservation; health and social services; supporting veteran and military service personnel along with preserving arts and cultural programs.

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Legislative History: A Research Example

Research question:.

What is the purpose of Section 7701( l ) of the Internal Revenue Code, and what tax issues did Congress mean to address by this new subsection?

Step One: Retrieve the history citations.

To determine when a subsection of the IRC was added or amended , or which Public Law enacted or amended a subsection, look for the subsection's history or credits citations, which are printed  under the text of the subsection of the Code. 

While you can retrieve a subsection's history or credits citations from many sources of the Internal Revenue Code, CCH's   Standard Federal Tax Reporter   (print) and VitalLaw (formerly Cheetah)  (online) provide the most detailed information.

Print. In CCH's  Standard Federal Tax Reporter , consult the first two volumes , which are called "Internal Revenue Code I & II," to look up  Section 7701( l ) and the history or credits citations at the end of the subsection.

Online.  In  VitalLaw (formerly Cheetah) , enter the section number in the "Citation Lookup" search box.

Find the subsection that you are researching: Section 7701(l). Look for the "History Notes" for the subsection.

The notes indicate that Section 7701(l) was enacted by Section 13238 of Public Law No. 103-66 (The Omnibus Budget Reconciliation Act of 1993) and that Section 7701(l) has not been amended by any subsequent legislation.

Step Two: Identify the relevant committee report.

Using a specialized tax database, identify the committee  report that discusses the section of the Internal Revenue Code that you are researching.

Note that the databases will not provide the relevant committee report in full. Rather, they will provide an excerpt that discusses the particular section. The databases may differ on the length of the excerpt provided.

VitalLaw (formerly Cheetah)

From the section that you are researching, click on "Related Items." From the dropdown menu, select "Committee Reports." 

This will display all committee reports that discuss legislation affecting Section 7701. Find and select the report that is related to P.L. 103-66 (The Omnibus Budget Reconciliation Act of 1993).

Read the excerpt from the committee report to try to find an answer to your research question about the legislative history of Section 7701(l).

Locate the section that you are researching by clicking "Find by Citation." In the "Current Code" search box, enter the section number.

At the top of the text of the section, select "Com Rpts."

The right sidebar will display all  committee reports that discuss legislation affecting Section 7701. 

Find and select the report that is related to P.L. 103-66 (The Omnibus Budget Reconciliation Act of 1993).   Read the  excerpt from  the committee report to try to find  an  answer to your  research question about the legislative history of Section 7701( l ).

From the Lexis product switcher, select Lexis Tax. Locate the section that you are researching by clicking on: Federal > Get a Document. In the “IRC Sec.” search box, enter the section number, and then select it from the results.

To the left of the text of the section, expand “IRC Legislative History.”

The results will list all relevant public laws. Because Section 7701( l ) was enacted by Public Law No. 103-66 (The Omnibus Budget Reconciliation Act of 1993), look for and select this.

Read the excerpt from the committee report to try to find an answer to your research question about the legislative history of Section 7701( l ). Note that the excerpt includes a link to the full committee report.

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Locate the section that you are researching by entering the section number in the “Go to Document” box.

Once you are viewing the section, click on “Related” to the right of the text of the section.

Using the filters on the left, narrow by collection to “Legislative Materials.” Select the committee report that is related to P.L. 103-66 (The Omnibus Budget Reconciliation Act of 1993). Read the excerpt from the committee report to try to find an answer to your research question about the legislative history of Section 7701( l ).

Step Three: Download the full committee report.

You can view the full committee report, including its original pagination, through ProQuest Congressional . 

Use an Advanced Search of Legislative & Executive Publications to retrieve the report. You can search by the title of the committee report, limit by Congress, and filter to House & Senate Reports. 

Open the committee report as a full-text PDF.

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A Systems View Across Time and Space

• Open access
• Published: 16 February 2021

Factors influencing taxpayers to engage in tax evasion: evidence from Woldia City administration micro, small, and large enterprise taxpayers

• Erstu Tarko Kassa   ORCID: orcid.org/0000-0002-8199-4910 1  

Journal of Innovation and Entrepreneurship volume  10 , Article number:  8 ( 2021 ) Cite this article

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The main purpose of this paper is to investigate factors that influence taxpayers to engage in tax evasion. The researcher used descriptive and explanatory research design and followed a quantitative research approach. To undertake this study, primary and secondary data has been utilized. From the target population of 4979, by using a stratified and simple random sampling technique, 370 respondents were selected. To verify the data quality, the exploratory factor analysis (EFA) was conducted for each variable measurements. After factor analysis has been done, the data were analyzed by using Pearson correlation and multiple regression analysis. The finding of the study revealed that the relationship between the study independent variables with the dependent variable was positive and statistically significant. The regression analysis also indicates that tax fairness, tax knowledge, and moral obligation significantly influence taxpayers to engage in tax evasion, and the remaining moral obligation and subjective norms were not statistically significant to influence taxpayers to engage in tax evasion.

Introduction

In developed and developing countries, business owners, government workers, service providers, and other organizations are forced by the government to pay a tax for a long period in human being history, and no one can escape from the tax of the country. To support this, there is an interesting statement mentioned by Benjamin Franklin “nothing is certain except death and taxes”. This statement confirmed that every citizen should be subjected to the law of tax, and they are obliged to pay the tax from their income. To build large dams, to construct transportation infrastructures, and to provide quality social services for the community, collecting a tax from citizens plays a significant role for the governments (Saxunova and Szarkova, 2018 ).

Tax is the benchmark and turning point of the country’s overall development and changing the livelihoods and enhancing per capital income of the individuals. The gross domestic product of the developed countries and average revenue ratio were 35% in the year 2005, whereas in developing countries the share was 15% and in third world countries also not more than 12% (Mughal, 2012 ).

In the developing world, countries have no system to collect a sufficient amount of tax from their taxpayers. The expected amount of revenue cannot be enhanced due to different reasons. Among the reasons tax operation of the system may not be smooth, tax evasion and lack of awareness creation for the taxpayers are common in the developing world, and citizens are not committed to paying the expected amount of tax for their countries (Fagbemi et al., 2010 ). In today’s world, this remains very much the same as persons now pay taxes to their governments. As the world has evolved, tax compliance has taken a back seat with tax avoidance and tax evasion being at the forefront of the taxpayer’s main objective. Tax avoidance is the use of legal means to reduce one’s tax liability while tax evasion is the use of illegal means to reduce that tax liability (Alleyne & Harris, 2017 ). Tax evasion is a danger to the community; the countries and international organizations have been making an effort to fight undesirable phenomena related to taxation, the tax evasion, or tax fraud (Saxunova and Szarkova, 2018 ).

Tax evasion may brings a devastating loss for the country's GDP at the micro level, and it became a debatable and a special concern for tax collector authorities (Aumeerun et al., 2016 ). The participants in tax evasion activity critized by different individuals and groups by considering the loss that brings to the country economy (Alleyne & Harris, 2017 ).

According to Dalu et al., ( 2012 ) state that in the Zimbabwe tax system there are identical devils tax evasion and tax avoidance that create a problem for the government to collect a tax from taxpayers. Like Zimbabwe, many nations have faced challenges to cover the annual budget and to construct different infrastructures due to the budget deficit created by tax evasion (Alleyne & Harris, 2017 ; Turner, 2010 ).

Scholars especially economists agreed that tax evasion may be considered a technical problem that exists in the tax collection system, whereas psychologists believed that tax evasion is a social problem for the countries (Terzić, 2017 ).

Tax evasion practices are more worsen in developing countries than when we compare against the developed countries. Tax evasion is like a pandemic for the countries because they are unable to control it. Therefore, governments were negatively affected by tax evasion to improve the life standard of its citizens and to allocate a budget for public expenditure, and it became a disease for the country’s economy and estimated to cost 20% of income tax revenue (Ameyaw et al., 2015 ; degl’Innocenti & Rablen, 2019 ; Palil et al., 2016 ).

Several factors may lead taxpayers to engage in tax evasion. Among the factors, tax knowledge, tax morale, tax system, tax fairness, compliance cost, attitudes toward the behavior, subjective norms, perceived behavioral control, and moral obligation are major factors (Alleyne & Harris, 2017 ; Rantelangi & Majid, 2018 ). Other factors have also a significant effect on taxpayers to engage in tax evasion practice such as capital intensity, leverage, fiscal loss, compensation, profitability, contextual tax awareness, interest rate, inflation, average tax rate, gender, and ethical tax awareness on tax evasion (Annan et al., 2014 ; AlAdham et al., 2016 ; Putra et al., 2018 ).

According to Woldia City Administration Revenue Office annual report ( 2019/2020 ) from July 1, 2019, to June 30, 2020, 232,757,512 birr was planned to be collected from taxpayers; however, the office was able to collect only 198,537,785.25 birr; however, the remaining 34,219,726.75 birr have not been collected by the office from the taxpayers. The reason behind this was there might be some factors that lead to taxpayers not to pay the annual tax from their annual income. Based on the review of the previous studies and by diagnosing the tax collection system in the city administration, the researcher identified the gaps. The first gap that motivated the researcher to undertake this study is that the prior studies did not address the factors that influence the tax collection system of Ethiopia, specifically, there is no research result that was able to show which factors influence taxpayers to engage in tax evasion in the Woldia city administration. The other gap is the previous study focused on the demographic, economic, social, and other factors. However, this study mainly focused on the behavioral and other factors that lead taxpayers to engage in tax evasion.

To indicate the benefit of this study, the study specifies on which critical factors the authority will focus on to enhance annual revenue and to aware tax payers of the devastating impact of tax evasion. Moreover, the paper may bring new insights on tax evasion influential non-economic factors that the researchers may give more emphasis on the upcoming researches. This paper will also contribute innovative ways to know the reasons why tax payers engage in tax evasion and inform the authority at which factors they will struggle to reduce their influence and to enhance revenue. The study can be an evidence that the tax authority should launch innovative techniques to control tax evasion practices. Moreover, applying fair tax system in the collectors’ side, the enterprises become innovative and will expand their business.

To sum up, in this study, the researcher examined which factor (tax knowledge, tax fairness, subjective norms, moral obligation, and attitude towards the behavior) influences taxpayers to engage in tax evasion activities. Based on the above discussion, the objective of the study is to examine factors that influence taxpayers to engage in tax evasion in Woldia city administration.

Literature review

Tax and tax evasion.

Tax is charged by the government to the business, governmental organization, and individual without any return forwarded from the authority. Tax can be categorized as direct tax which is collected from the profit of the companies and the incomes of individuals, and the other category of tax is an indirect tax collected from consumers’ payment (James and Nobes, 1999 ).

Tax evasion is a word explaining individuals, groups, and companies rejecting the expected amount of payment for the authority. It is a criminal offense on the view of law (Nangih & Dick, 2018 ). The overall procedure of tax collection faced different challenges especially tax evasion the most important one. Tax evasion is done intentionally by taxpayers by avoiding and hiding different documents that become evidence for the tax collection authorities. It is simply an illegal act to pay the true amount of the tax (Aumeerun et al., 2016 ; Storm, 2013 ). Tax evasion is a crime that is able to distort the overall economic, political, and social system of the country. The economic aspect of tax evasion affects fair distribution of wealth for the citizens. The social aspect also creates different social groups motivated by tax evasion discouraged by these individuals due to unfair competition (AlAdham et al., 2016 ). Tax evasion is a mal-activity that reduces the amount of tax paid by the payers. Perhaps the taxpayers who engaged in evasion activity may be supported by the legislative of the country (Kim, 2008 ; Putra et al., 2018 ; Allingham & Sandmo, 1972 ). According to Al Baaj et al. ( 2018 ) argument, there are two types of tax evasions. The first one is the legal evasion or tax avoidance which is supported by the legislation of the countries and the right is given for the taxpayer, but it is not constitutional (Gallemore & Labro, 2015 ; Zucman, 2014 ).

Theoretical reviews on factors affecting tax evasion

The illegal activity done by taxpayers has many determinants that lead them to engage in tax evasion. Among the factors that trigger taxpayers who participate in this activity are the economic factors. Under the economic factors, business sanctions, business stagnation, and the amount of tax burden are considered as influential factors. On the other hand, legal factors, social factors, demographic factors, mental factors, and moral factors are the most important factors (Saxunova and Szarkova, 2018 ). Many factors determine the taxpayers’ interest to engage in tax evasion. Among the factors, the following are considered under this review.

The factors that able to influence taxpayers to engage in tax evasion are moral obligation . It is a principle and a duty of taxpayers by paying a reasonable amount of tax for the tax authorities without the enforcement of others. It is an intrinsic motivation of payers paying the tax (Sadjiarto et al., 2020 ). When taxpayers have low tax morals, they will become negligent to pay their allotted tax, and they will engage in tax evasion (Alm & Torgler, 2006 ; Frey & Oberholzer-Gee, 1997 ; Torgler et al., 2008 ). According to Feld and Frey ( 2007 ), when tax officials are responsible and provide respect in their duties toward taxpayers, tax morale or the honesty of taxpayers will increase. Tax morals may be affected by a demographic and another factor like income level, marital status, and religion (Rantelangi & Majid, 2018 ). It is the determinant behavior of tax payers whether they participate or not. Tax morals can affect positively taxpayers to engage in tax evasion (Nangih & Dick, 2018 ; Terzić, 2017 ). It is known that taxes levied by the concerned authority are ethical. As cited by Ozili ( 2020 ), McGee ( 2006 ) argues that there are three basic views on the ethics and moral of tax evasion. The first view is tax evasion is unethical and should not be practice by any payer, the second argument deals that the state is illegal and has no moral authority to take anything from anyone, and the last argument is tax evasion can be ethical under some conditions and unethical under other situations; therefore, the decision to evade tax is an ethical dilemma which considers several factors (Robert, 2012 ). Therefore, the discussion leads to the following hypothesis:

H 1 . Moral obligation has a negative influence on taxpayers to engage in tax evasion.

The other factor that influences taxpayers to engage in tax evasion is tax fairness . Tax fairness is a non-economic factor that determines the tax collection of the country (Alkhatib et al., 2019 ). It is known that the tax collection procedures, principles, and implementation must be fair. Unethical behavior may happen due to the unfairness of the tax collection process. The fairness of tax may influence payers positively to pay the tax. When the tax rate is not reasonable and fair, the payers will regret to engage in the tax evasion practices and they will inform authorities their annual income without denying the exact amount. Considering the ability of paying or acceptable tax rates helps to maintain the fairness of the taxation system (Rantelangi & Majid, 2018 ). The governments choose to levy in what amounts and on whom will pay a high tax rate (Thu, 2017 ). The tax rate is a factor that induces taxpayers to pay less amount from their income. The rate of tax should be fair and reasonable for the payers (Ozili, 2020 ). As cited by Gandhi et al. ( 1995 ) the Allingham and Sandmo’s model, Allingham and Sandmo ( 1972 ) shows that the tax rate on payment can be positive, zero, or negative, which implies that an increase in the tax rate may cause the tax payment to increase, remain the same, or decrease. The theoretical literature could not evidence the claim that an increase in the tax rate will lead to an increase in tax evasion (Gandhi et al., 1995 ). The fairness of tax is controversial and argumentative because there may not happen a similar amount of tax for all payers (Abera, 2019 ). Thus, based on this ground the study hypothesis would be:

H 2 . Tax fairness has a positive influence on taxpayers to engage in tax evasion.

Tax knowledge is vital for taxpayers to know the cause and effect brought to them to engage in tax evasion. If tax payers are well informed about tax evasion, their participation in tax evasion would be infrequent; the reverse is true for a taxpayer who is not well informed. Tax-related information should give more emphasis to enhance the knowledge of taxpayers and experts of the authority (Poudel, 2017 ). Tax knowledge is a means to enhance the revenue of the country from the side of tax payers (Sadjiarto et al., 2020 ). If the authorities cascade different training for taxpayers about tax evasion and other tax-related issues, taxpayers become reluctant to engage in tax evasion (Rantelangi & Majid, 2018 ). Tax knowledge is a determinant factor for the taxpayer to engage and retain from the tax evasion activities (Abera, 2019 ). When taxpayers are undertaking their routine tasks without tax knowledge, they may involve in certain risks that expose them to engage in tax evasion (Thu, 2017 ). Thus, the discussion leads to the following hypothesis:

H 3 . Tax knowledge has a negative influence on taxpayers engaged in tax evasion.

The stakeholders, government experts, families, individuals, groups, and peers influence taxpayers whether they engaged in tax evasion or not (Alleyne & Harris, 2017 ). As cited by Alkhatib et al. ( 2019 ), the influence of peer groups on tax taxpayers is high, thus affecting the taxpayers’ preferences, personal values, and behaviors to engage in tax evasion (Puspitasari & Meiranto, 2014 ). The stakeholders around the taxpayers might be motivators to push taxpayers in the criminal act of tax evasion. This act called subjective norms meant that the payers are influenced by peers and other stakeholders. When the tax payer is reluctant to pay a tax for the authority, his/her friends are more likely to hide tax. As cited by Abera ( 2019 ), there is a strong relationship between social norms and subjective norms with tax evasion and affects the small business taxpayers (Nabaweesi, 2009 ). The above discussion can support the following hypothesis of the study:

H 4 . Subjective norms have a positive influence on taxpayers to engage in tax evasion.

The other factor that influences taxpayers to engage in tax evasion is an attitude towards the behavior of taxpayers. Attitude is a means of evaluating the activities whether they are positive or negative of any object. Many studies have been done by different scholars by defining and identifying the relationship between the attitudes of taxpayers with tax evasion (Alleyne & Harris, 2017 ). If the attitude of taxpayers towards taxation is negative, they will be reluctant to pay their obligation to the authority; the reverse is true when taxpayers have positive attitudes towards taxation (Abera, 2019 ). Based on the above discussion, the hypothesis of the study would be as follows:

H 5 . Tax payers’ attitude towards the behavior has a positive influence on taxpayers to engage in tax evasion.

Conceptual framework of the study

The researcher identified the variables and presented the relationship between independent and dependent variables as follows (Fig. 1 ):

Conceptual framework of the study. Adapted from Alleyne and Harris ( 2017 ) and Rantelangi and Majid ( 2018 )

Materials and methods

The researcher applied descriptive and explanatory research design to carry out this study. The explanatory research design enables the researcher to show the cause and effect relationship between independent and dependent variables, and the descriptive research also helps to describe the event as it is. The quantitative approach has been followed by the researcher to analyze and interpret the numerical data collected from the respondents. The researcher used primary and secondary data. The primary data was collected from the respondents by using questionnaires, and the secondary data was also collected from the reports, websites, and other sources.

The target population of the study was 4979 taxpayers (micro, small, and large enterprises). From the total taxpayers, 377 are categorized under level “A,” 207 are under level “B,” and the remaining 4395 taxpayers are categorized under level “C”. From the target population by using a stratified sampling technique, the respondents have been selected. The target population has been divided by the level of taxpayers; after dividing the population by level, the researcher applied a simple random sampling technique to select respondents. To identify the target participants or sample size in this study, the researcher used Yamane’s ( 1967 ) formula. Hence, the formula is described as follows:

where N = target population, n = sample size, e = error term

Based on the sample size, the respondents have participated proportionally as follows from each level. The total population was divided by strata based on the level categorized by the authorities. By using a simple random sampling technique, 28 respondents were from level “A,” 15 respondents from level “B,” and 327 respondents from level “C” have participated.

Regarding data collection instruments , the data was collected by self-administered standardized questionnaires. The variable of the study a moral obligation was measured by 4 items; after conducting factor analysis, the fourth variable or questionnaire has been removed and after that correlation and regression analysis has been done for 3 items; the value of Cronbach’s alpha was .711; the other factor attitude towards the behavior was measured by 4 items with a value of .804 Cronbach’s alpha; the third variable subjective norms was also measured by 4 items; the value of Cronbach’s Alpha was .887, and tax evasion was measured by 5 items; the Cronbach’s alpha value was .868. For the above-listed variables, the questionnaires were adapted from Alleyne and Harris ( 2017 ), and the remaining variable tax fairness was measured by 7 items, the Cronbach’s alpha value was .905, the items were adapted from Benk et al. ( 2012 ), and the last variable tax knowledge was measured by 5 items. However, after conducting factor analysis, the fifth item has been removed due to low value of the variable. After the removal of the fifth item, the Cronbach’s alpha value for the remaining items was .800, the items were adapted from Poudel ( 2017 ). For all variables, the researcher has used a five-point Likert scale from strongly agree to strongly disagree.

To analyze the collected data, the researcher used descriptive statistics analysis, factor analysis, correlation analysis, and multiple regression analysis to know the result of variables by using SPSS Version 22. Moreover, the model of the study is described as follows:

where Y = tax evasion, X 1 = moral obligation, X 2 = tax fairness, X 3 = tax knowledge, X 4 = subjective norms, and X 5 = attitude towards the behavior, β = beta coefficient, B 0 = constant, e = other factors not included in the study (0.05 random error).

Results and discussion

Level of respondents.

As indicated in Table 1 from the total respondents, 88.4% are categorized under level “C,” 4.1% are leveled under “B,” and the remaining 7.6% of respondents have been categorized under level “A”.

Factor analysis of the study variables

To undertake exploratory factor analysis, the data should fulfill the following assumptions. The first assumption is the variables should be ratio, interval, and ordinal; the second one is within the variables there should be linear associations; the third assumption is a simple size should range from 100 to 500; and the last assumption is the data without outliers. Thus, this study data have been checked by the researcher whether the data meets the assumption or not. After checking the assumptions, factor analysis was conducted as follows.

KMO and Bartlett’s test

Conducting KMO and Bartlett’s test is a precondition to conduct the factor analysis of the study measuring variables. KMO measures the adequacy of the sample of the study. In the result reported in Table 2 , the value was 0.883 and enough for the factor analysis. Related with Bartlett test as shown in Table 2 , the value is 5727.623 ( p < 0.001), which reveals the adequacy of data using factor analysis.

As shown in Table 3 , factors were extracted from study data; there was a linear relationship between variables. From the table, we can understand that 6 variables have more than one eigenvalue. The first factor scored the value 31.782 of the variance, the second value is 11.739 of the variance, the third factor scored 8.246 of the variance, the fourth factor accounts for 6.725 of the variance, the fifth factor also accounts for 5.233, and the last factor scored 4.123 of the variance. All six factors were explained cumulatively by 67.85% of the variance.

As shown in the Fig. 2 , the scree plot starts to turn down slowly at the low eigenvalue which is less than 1. The six factors eigenvalue is greater than one.

Scree plot. Source: own survey (2020)

The pattern matrix is shown in Table 4 which is able to show the loading of each variable and the relationship of variables in the study. The highest value among the factors measured the variable considerably. The cutoff point of loading was set at .35 and above. Based on the loading cutoff point except two factors, all are significant and analyzed under this study. From the six variables (five independent and one dependent) incorporated under this study, the identified factors show that how significantly enough to measure the situation. These factors have scored greater than 1 eigenvalue and able to explain 67.85% of the variance. In general, the detail variables and their factor are described as follows:

The first component tax fairness has 7 factors; the eigenvalue is 8.58 and able to explain 31.78 of the total variance. In this component, the highest contributed factor was item TF3 (weight = .925), TF5 (weight = .865), TF1 (weight = .859), TF2 (weight = .778), TF4 (.668), TF6 (weight = .614), and TF7 (weight = .568). The second component was tax evasion and has 5 items; the eigenvalue is 3.17 and explaining 11.73 of the variance. The factor weight of the items, TE4 (factor weight = .860), TE5 (factor weight = .810), TE3 (factor weight = .730), TE2 (factor weight = .650), and the last one is TE1 (factor weight = .606). The third component was subjective norms; it has 4 factors the weight of each factor described as follows. The first item SNS1 weight = .898, SNS2 factor weight = .887, SNS4 factor weight = .846, and SNS3 factor weight = .820. Moreover, the eigenvalue of this component is 2.226 and explained 8.246 of the variance of the study. The fourth component is an attitude towards the behavior. This variable has four factors that have 1.816 eigenvalue and explained 6.725 of the total variance. Among the items, ATB2 factor weight = .863, ATB1 factor weight = .792, ATB3 factor weight = .791 and the last factor is ATB4 factor weight = .500. The fifth component of the study is tax knowledge; at the very beginning of this variable, the researcher adapted five items. However, one item (TK5) was not significant and removed from this analysis. In this component, the highest value was scored by TK3 (factor weight = .866), the second highest TK2 (factor weight = .801), the third highest factor weight (weight = .700), and the last factor is TK4 (weight = .690). The eigenvalue of this component was 1.413 and explained 5.233% of the variance. The last component is a moral obligation; like tax knowledge, the researcher adapted for this variable 4 items, though, one item (MO4) was not significant and removed from the items list. The eigenvalue of this component was 1.113 and explained 4.123 of the variance. From the items, MO1 scored the highest factor weight of .891, the second highest weight in this component was MO3 with a factor weight of .854, and the third highest factor weight was scored by MO3 with a value of .508.

Association analysis of the study variables

To analyze the correlation between variables as shown in the Table 5 , the relation between subjective norms with taxpayers engaged in tax evasion is r = 0.240 ( p < 0.05); this indicates that there is a statistically significant relationship between the two variables. The relationship between ATB with TE, MO with TE, TK with TE, and TF with TE, the Pearson correlation result is r = 0.318 ( p < 0.05), r = 0.371 ( p < 0.05), .446, and r = 0.691 ( p < 0.05) respectively and statistically significant. It implies that the independent variables have a positive relationship with the dependent variable of the study with a statistically significant level of p < 0.05 and n = 370.

Effect analysis of the study variables

As shown in Table 6 , the study independent variables (SNS, ATB, MO, TK, and TF) explained the study dependent variable (TE) by 54.9%. This result indicates that there are other variables that explain the dependent variable by 45.1% which has not been investigated under this study.

Hypothesis test

The proposed hypothesis of the study has been tested based on the coefficient of regression and the “ p ” value of the study variables. The detail result is described as follows:

As shown in Table 7 , moral obligation influences positively the taxpayers to engage in tax evasion activities with a beta value of .177 and p < .05. This result entails that the taxpayers are influenced by other stakeholders to engage in tax evasion, and they have low moral value to pay the tax levied by the government. This result is supported by the finding of Alleyne and Harris ( 2017 ), Rantelangi and Majid ( 2018 ), and Sadjiarto et al. ( 2020 ). Thus, the hypothesis related to this variable has been rejected because moral obligation influences positively taxpayers to engage in tax evasion.

H 2 . Tax fairness has a positive influence on taxpayers to engage in tax evasion

To minimize the participation of taxpayers engaged in tax evasion, tax fairness plays a significant role. The regression result indicates in Table 7 that tax fairness positively influences the taxpayers to engage in tax evasion. This result is similar to the finding of Majid et al., ( 2017 ) and contradicts with the finding of Rantelangi and Majid ( 2018 ) and Alkhatib et al. ( 2019 ). Accordingly, the proposed hypothesis has been accepted because the beta value is .563 and the p value is less than .05.

H 3 . Tax knowledge has a negative influence on taxpayers to engage in tax evasion

Table 7 shows that tax knowledge influences the taxpayers positively to engaged in tax evasion. The beta value is .183 and the value is p = 0.00. It is known that when the taxpayers were not well informed about the importance of tax for the country development and the devastating issues of tax evasion, they will be forced to engage in tax evasion. This finding contradicts the finding of Rantelangi and Majid ( 2018 ) and is supported by the finding of AlAdham et al. ( 2016 ). To conclude, the proposed hypothesis rejected because tax knowledge positively influenced the taxpayers to engage in tax evasion.

H 4 . Subjective norms have a positive influence on taxpayers engaged in tax evasion

Table 7 indicates that subjective norms have not been significantly influenced positively by the taxpayers engaged in tax evasion, which means taxpayers were not influenced by others to participate in tax evasion activities. This result is consistent with the finding of Alleyne and Harris ( 2017 ). Thus, the proposed hypothesis is rejected because the variable of subjective norms was not statistically significant with a p value of .099.

H 5 . Tax payers’ attitude towards the behavior has a positive influence on taxpayers to engage in tax evasion

As indicated in Table 7 , attitudes toward the behavior were not significantly influencing the taxpayers to participate in tax evasion with the p value of .985. However, according to the study conducted by Alleyne and Harris ( 2017 ), attitude toward the behavior significantly predicts the intentions of taxpayers to engage in tax evasion. This finding contradicts with this study result. To conclude, the proposed hypothesis has been rejected because the variable is not statistically significantly influencing the taxpayers to engage in tax evasion activities.

According to Table 7 through the examination of coefficients, moral obligation had a positive effect on tax evasion having a coefficient of .197. This means that a 1% change in moral obligation keeping the other things remain constant can result to motivate taxpayers to engage in tax evasion by 19.7% in the same direction. This finding is similar to the result of Alleyne and Harris ( 2017 ), Nangih and Dick ( 2018 ), Rantelangi and Majid ( 2018 ), and Sadjiarto et al. ( 2020 ). Tax knowledge had a positive effect on tax evasion having a coefficient of .174. This indicates that a 1% change in tax knowledge keeping the other things constant can result in a change in taxpayers to engage in tax evasion by 17.4% in the same direction. This finding contradicts the finding of Rantelangi and Majid ( 2018 ) and is similar to the finding of AlAdham et al. ( 2016 ) and Thu ( 2017 ). Tax fairness also had a positive effect on tax evasion having a coefficient of .468. This implies that a 1% change in tax fairness keeping the other things remain constant can result in a change in taxpayers engage in tax evasion by .468% in the same direction. This result is similar to the finding of Majid et al. ( 2017 ) and contradicts the finding of Alkhatib et al. ( 2019 ) and Rantelangi and Majid ( 2018 ). Thus, the final model of the study would be:

Tax evasion = .623 + .197MO + .174TK + .468TF

To generalize, the standardized beta coefficient indicates that tax fairness highly affects taxpayers to engage in tax evasion by 56.3%, tax knowledge affects secondly taxpayers to engage in tax evasion by 18.3%, and moral obligation affects taxpayers to engage in tax evasion by 17.7%. The remaining variables subjective norms and attitude towards the behavior were not statistically significant.

Conclusion and recommendations

Every citizen of the country was subjected to pay the tax of the country levied by the authority that administered the revenue. However, the taxpayer may be reluctant to pay a tax based on their revenue. There are push factors that instigate payers to engage in tax evasion. Sometimes the payers may be convinced themselves that being engaged in tax evasion is ethical, others may consider it unethical. They may argue “I Do Not Receive Benefits, Therefore I Do Not Have to Pay” (Robert, 2012 ). This study tried to examine the factors that influence taxpayers to engage in tax evasion by identifying five factors namely moral obligation , tax fairness , tax knowledge , subjective norms , and taxpayers’ attitude towards the behavior . The study findings based on the result analysis described as follows.

The correlation analysis of the study shows that there was a positive and statistically significant relationship between independent variables with the dependent variable (tax evasion). The regression result, on the other hand, revealed that tax knowledge affects taxpayers to participate in tax evasion activities with a statistically significant level. This finding can be evidence that the knowledge of the taxpayers regarding the importance of tax is limited. Because according to the regression result, they engaged in the tax evasion activities in the study area. The other factor that affects taxpayers to engage in tax evasion is tax fairness. The regression result of tax fairness supported that taxpayers have been affected by the fairness of the tax system in the study area to participate in tax evasion. The finding confirms that the tax charged by the government is not fair for payers. Thus, we can conclude that due to the absence of tax fairness taxpayers are engaged in tax evasion in the city administration. The other variable moral obligation regression result confirms that moral obligation affects positively taxpayers to engage in tax evasion. This is signal that taxpayers did not know the moral value of retaining from tax evasion that is why the moral obligation results in positive and statistical significance. Generally, tax fairness highly affects taxpayers to evade taxes, tax knowledge affects secondly, and moral obligation affected tax payers thirdly to evade tax in the city administration.

Based on the findings, the following recommendations have been forwarded by the researcher. The first one is creating a fair tax payment system, or charging fair tax for the payers helps to reduce the participation of payers in tax evasion. The second recommendation is cascading different training related to tax will help taxpayers to pay a tax based on their annual income. The last recommendation is related to tax moral or moral obligation. The moral is an abounding rule for human beings to know the right and wrong activities. The authority is better to strive to recognize the payers about the moral obligations of the payers and better to inform to the payers to think about the shattering effect of tax evasion for the country development and city as well.

Further future lines of research will attempt to:

Investigate the employees’ side of tax authority and the perception of the community towards tax evasion.

Explore other influencing factors that affect tax payers to engage in tax evasion which are not incorporated under this study.

Conducting a comparative study on one city, region, and country with others.

Suggestion for future study

This study addresses only one city administration in Amhara region; other researchers are better to undertake the study on one more cities.

Availability of data and materials

All data are included in the manuscript and available on hand too.

Abbreviations

Attitude towards the behavior

• Moral obligation

Micro and small enterprises

Subjective norms

• Tax evasion
• Tax fairness
• Tax knowledge

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Acknowledgements

I am grateful to all anonymous reviewers, my respondents, and Woldia City administration revenue office experts sharing the required information.

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Erstu Tarko Kassa

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Kassa, E.T. Factors influencing taxpayers to engage in tax evasion: evidence from Woldia City administration micro, small, and large enterprise taxpayers. J Innov Entrep 10 , 8 (2021). https://doi.org/10.1186/s13731-020-00142-4

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Received : 01 October 2020

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Published : 16 February 2021

DOI : https://doi.org/10.1186/s13731-020-00142-4

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3 Takeaways From Kamala Harris’s Interview on MSNBC

In her first one-on-one cable TV interview since becoming the nominee, the vice president repeatedly dodged direct questions and stuck firmly on message.

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By Reid J. Epstein

Reid J. Epstein covers Kamala Harris’s presidential campaign. He reported from Washington.

• Published Sept. 25, 2024 Updated Sept. 26, 2024, 9:01 a.m. ET

As Vice President Kamala Harris parses out the details of her agenda, she has favored broad strokes over detailed policy papers. Only recently has she begun sitting for interviews, which have elicited few details about what her presidential administration might look like.

Little about that careful approach changed during a 25-minute interview with Stephanie Ruhle of MSNBC that was broadcast on Wednesday night. It was Ms. Harris’s first one-on-one interview on cable television since becoming the Democratic nominee.

In her discussion with a friendly interviewer, the vice president again presented herself as a champion of the middle class and hit many of the same themes from her pro-business economic speech earlier in the day. She largely avoided direct questions about how she would govern and why some voters remain fond of former President Donald J. Trump’s stewardship of the economy.

Here are three takeaways from Ms. Harris’s interview.

Harris had roundabout answers to open-ended questions.

Ms. Ruhle’s first question was about how Ms. Harris might respond to people who hear her proposals and say, “These policies aren’t for me.” The MSNBC host’s second was about why voters tend to tell pollsters that Mr. Trump is better equipped to handle the economy.

Ms. Harris responded to the fairly basic and predictable questions with roundabout responses that did not provide a substantive answer.

Instead of offering any explanation for why Mr. Trump polls better on the economy — a matter that has vexed Democrats as President Biden has overseen a steadily improving economy — Ms. Harris instead blasted Mr. Trump’s record. She blamed him for a loss of manufacturing and autoworker jobs and said his tariff proposals would serve as an added sales tax on American consumers.

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