ANTECEDENTS OF TAX AUDITORS’ AGGRESSIVENESS IN JUDGMENT WHEN SETTLING TAX AUDITS: A CONCEPTUAL MODEL

Abstract

In the self-assessment system, tax audit has become a routine job for tax auditors. In completing tax audits, tax auditors frequently challenge with different tax issues, complexity and ambiguity of tax laws, poor commitment from taxpayers, poor record keeping and limited manpower, as well. Such stressful working day experiences are believed can contribute stress to the tax auditors. Tax auditors also need to rely on their domain knowledge in judgment and decision making. This paper proposes a conceptual model that links domain knowledge, stress and culpability factors in predicting tax auditors’ aggressiveness in judgment when settling tax audits. The culpability factors consist of the size of the audit adjustment, the duration years involved with erroneous, the presence of tax agent and the taxpayer financial strength. The proposed conceptual model can provide insights to the policy makers and Inland Revenue Board of Malaysia especially in managing stress among tax auditors. This study has merit that proposed a conceptual model in predicting the aggressiveness of tax auditors’ judgment in settlement of tax audits. It adds to the literature by exploring the applicability of Culpability Theory in context of Malaysian setting. For future research, validating the proposed model through questionnaire survey is suggested.