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Tax consultants' incentives: A game-theoretic investigation into the behavior of tax consultants, taxpayers, and the tax authority in a setting of tax complexity

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  • Grottke, Markus
  • Lorenz, Johannes

Abstract

We propose a game-theoretic investigation to capture the interplay between the behavior of tax consultants, taxpayers, and the tax authority in a setting of tax complexity. Our purpose is to provide answers to two research questions: Which aspects of the strategic interaction between the players induce tax consultants to provide inaccurate consulting services? How can we change the incentive structure in order to improve tax consulting quality? We find that tax consultants can be best motivated to work accurately by exogenously increasing the probability of tax underpayment and by ensuring that the tax authority corrects both tax underpayment and tax overpayment.

Suggested Citation

  • Grottke, Markus & Lorenz, Johannes, 2017. "Tax consultants' incentives: A game-theoretic investigation into the behavior of tax consultants, taxpayers, and the tax authority in a setting of tax complexity," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-30-17, University of Passau, Faculty of Business and Economics.
    • Handle: RePEc:zbw:upadbr:b3017
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    References listed on IDEAS

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    7. Christian, Charles W. & Gupta, Sanjay & Lin, Suming, 1993. "Determinants of Tax Preparer Usage: Evidence from Panel Data," National Tax Journal, National Tax Association, vol. 46(4), pages 487-503, December.
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    Cited by:

    1. Dyck, Daniel & Lorenz, Johannes & Sureth, Caren, 2022. "How do tax technology and controversy expertise affect tax disputes?," arqus Discussion Papers in Quantitative Tax Research 274, arqus - Arbeitskreis Quantitative Steuerlehre.

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    More about this item

    Keywords

    tax consultant; tax law; game theory;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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