Effects of Experience on Tax Professionals’ Evaluations of Facts and Judgments

Abstract:     
This research examines how differences in experience among tax accountants with three distinct levels of general practice experience - seniors, managers, and firm-wide partner/senior manager-experts - affect performance on two decision making tasks: (1) configural processing of information cues, i.e., cue usage of variations in relevant client facts, and (2) judgments of the likelihood of nontaxability for a client transaction. Two hundred forty-eight (248) tax professionals from a single international accounting firm evaluated 16 fact patterns. The results indicate (1) experience interacts significantly with configural processing - a significantly larger percentage of variation in judgments of taxability is explained by systematic variations in client facts for more experienced tax professionals, (2) tax managers, but not tax seniors, are able to both process variations in client facts and make taxability judgments similar to tax experts in a closed cue setting, and (3) tax seniors are less likely than managers or partners to recognize increased risks of taxable treatment. We discuss implications for future research, tax education, and practice.

working papers series