On the Risk Propensity of Tax Practitioners in Korea
Asian Tax Journal Vol. 1 No. 2 (2000), pp. 55-84
Abstract
The objective of this research is to observe the influences of the chosen explanatory factors on the risk propensity of tax practitioners in Korea. The chosen factors are as follows: (1) Economic factors: tax savings, probability of tax audit, possible sanctions imposed on tax professionals. (2) Characteristics of the clients: amount of contract fees paid to tax preparers, risk propensity of the clients. (3) Other factors: job career of tax practitioners, sales volume of the client company, work experience of the subjects. Questionnaires were delivered to the accounting managers of small and medium enterprises through mail in April, 2000. The subjects were asked to give their responses about their own tax practitioners. So to speak, we were trying to measure the risk attitudes of tax preparers through their clients. That's partly due to the difficulty of getting honest responses directly from the tax practitioners themselves, for the risk propositions are known to have somewhat delicate natures. We could collect 128 samples from our subjects. Regression analysis was done resulting in 0.229 as the R-square score. Interpreting the results, four factors including tax savings, amount of contract fees paid to preparers, job careers of the tax practitioners and work experience of the subjects were proven to be statistically significant. That result means that the above variables have meaningful influences on the risk propensity of tax practitioners. Meanwhile, other variables including the probability of tax audit, sanctions against preparers, clients' risk propensity and sales volume were not statistically significant. The present research suggests that tax practitioners usually consider several factors for the benefits of their clients faced with tax ambiguities. Accordingly, National Tax Office is advised to give full considerations on those factors which are influential on the risk propensity of tax practitioners for the improvement of administrative efficiency.
Keywords
- Tax Practitioners
- Risk Propensity
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