Journal Articles

The Economic Benefits of Regulation:Evidence from Professional Tax

1989, Accounting Review

F. Ayres, Peggy A. Hite, B. Jackson


An area of concern to tax policymakers is the role of third-party tax preparers in income tax reporting. The degree of consistency in the judgments of tax preparers subject to differing degrees of governmental regulation is examined. Economic theory of regulation indicates that certified public accountants (CPA), who are subject to a higher degree of governmental regulation, would be expected to recommend and justify more protaxpayer positions in ambiguous areas of tax law than would unlicensed preparers. This hypothesis is tested by administering a set of 5 tax cases with a high degree of uncertainty regarding the correct tax status to groups of CPAs and non-CPA tax practitioners. CPAs are found to be consistently more protaxpayer in their judgments than non-CPAs. Current attempts to reduce the latitude of the practitioner signal a move by government officials to reduce the benefits of regulation to regulated tax practitioners.


Ayres, F., Peggy A. Hite, and B. Jackson (1989), "The Economic Benefits of Regulation: Evidence from Professional Tax Preparers," The Accounting Review, Vol. 44, April, pp. 300-312.

Kelley School of Business

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