The Application of Commitment Trust Theory to a Tax Domain, Ruth Lynch

The 2022 KBS Spring Series continues on Tuesday 22nd February at 1:00 p.m with a seminar by, Ruth Lynch.  The seminar format is informal and interactive facilitating discussion and Q&A this will take place on MS Teams  Click here to join the meeting  The title and abstract are below.

The Application of Commitment Trust Theory to a Tax Domain

This paper explores power and trust in tax client relationships through the lens of Commitment Trust Theory, and the perceptions of tax practitioners is a wide range of contexts. Tax impacts inequality, both within and between countries. Tax practitioners, as intermediaries, have a significant impact on tax compliance levels (Kirchler et al. 2008; Sikka and Willmott 2010; Alm et al. 1992; Cooper et al. 2013; Pickhardt and Prinz 2014; Kanagaretnam et al. 2018). Tax practitioners also face considerable commercial pressures within tax practices (Malsch and Gendron 2013; Spence and Carter 2014; Spence et al. 2017). Unpicking the client relationship in the light of increased concern about aggressive tax practices has both societal and practice significance. Using Commitment Trust Theory as a lens (Morgan & Hunt 1994), in this paper, I focus on how practitioners build long term trusting relationships with their tax clients, and the benefits and limitations of such close relationships as it pertains taxpayer compliance. Commercial imperatives drive tax practitioners to ensure long-term relational success with their clients, and I find that tax practitioners aim to work with clients with a similar propensity for risk. The findings support the importance for tax practitioners of nurturing their client relationships over the long term (Ravald and Grönroos 1996; Migdadi 2020). My findings should empower regulators to act in a targeted way in individual jurisdictions by emphasizing different elements of governance, and through leveraging the strength of long-term tax client relationships to encourage taxpayer compliance.

All are warmly welcome, further information on the KBS Spring series can be found at https://www.ul.ie/business/research/research-events