Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88160
Authors: 
Blaufus, Kay
Bob, Jonathan
Trinks, Matthias
Year of Publication: 
2013
Series/Report no.: 
Arqus-Diskussionsbeiträge zur quantitativen Steuerlehre 150
Abstract: 
Tax accounting and tax law concern the probability thresholds that can require the taxpayer to estimate the likelihood that a tax position would be upheld by a court. Tax complexity and the consequent ambiguity results in a reliance by most taxpayers on a tax expert estimate of this likelihood. This study examines whether the tax experts are able to accurately forecast the outcome of tax court decisions and compares tax expert predictions to those of laymen. Our results reveal no significant differences with respect to the forecasting performance of professional tax advisors and laymen. Moreover, the tax advisors exhibit a significantly higher level of overconfidence compared to laymen and the degree of overconfidence increases with professional experience. A comparison of two groups of tax experts, tax advisors and revenue agents demonstrates that the tax advisors exhibit the highest level of overconfidence and form stronger appeal recommendations that indicate a type of advisor bias.
Subjects: 
tax risk
overconfidence
client advocacy
tax controversy
forecasting
JEL: 
M40
K20
H20
Document Type: 
Working Paper

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