Tax practitioners’ willingness to trust clients : effects of prior experience , situational, and dispositional variables

This study investigates professional tax preparers' willingness to include questionable client-provided data in a tax return without verifying the information. Although a recent survey of tax practitioners by Yetmar et al. (1998) found that the issue of reliance on client data is a significant ethical problem in practice, a very limited amount of previous research has investigated the factors that influence tax practitioners' reliance decisions. In the current paper, the issue of client reliance is viewed as a problem of trust and suspicion, and the general model of trust and suspicion proposed by Kee and Knox (1970) is adopted as a conceptual framework for addressing this issue. Based on this model and previous research findings, it was hypothesized that client reliability, the client's year-end tax payment status, the general propensity to trust others, and tax practitioners' attitudes toward risk would influence reliance decisions. The findings, based on a study of CPA tax practitioners, indicate that client reliability and tax payment status each had a significant impact on client reliance. However, contrary to expectations, the general tendency to trust others did not influence client reliance decisions in a tax context. The results provide mixed support for the hypothesized effects of tax preparers' risk attitudes on decisions. The findings of the study also raise questions regarding the appropriateness of tax practitioners' client reliance decisions.