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The Impact of Multiple Tax Returns on Tax Compliance Behavior: A Mental Accounting Framework.
Kimberly K. Moreno,
Northeastern University
Debra Salbador, Virginia Tech
Sudip Bhattacharjee, Virginia Tech
ABSTRACT. Tax compliance research has used prospect theory to describe taxpayers’ behavior finding that taxpayers with pending payments due (loss frame) report more aggressively than taxpayers with pending refunds (gain frame). We extend the research by incorporating the more realistic element of taxpayers filing multiple returns (e.g., state and federal returns). Using mental accounting, we find that, contrary to prior tax compliance research based on prospect theory, taxpayers are more aggressive in a refund position than a payment due position when the current cash position is presented as multiple outcomes. These results provide additional insight into factors impacting taxpayers’ compliance decisions.
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