The Influence of Prepayment Position and Taxation Information Dissemination on Taxpayers Compliance Behavior

Prepayment position (additional tax due vs a tax refund) shouldn't influence taxpayer compliance behavior at the time of filing an annual tax return. However, prospect theory predicts that an individual's income tax withholding position affects taxpayer compliance. Prior research has produced mixed results. Then, to spur tax compliance, traditional enforcement paradigm should be supported by a new paradigm, called service paradigm. Service paradigm considers as a more persuasive approach than a traditional one. Service may be delivered through information dissemination. The information dissemination includes enforcement-oriented information and service-oriented information. This study uses a laboratory experiment to examine the influence of tax prepayment position and information dissemination on two type of taxpayer compliance, namely filing and reporting compliance. Our results show that subject in a tax due position are more aggressive than subject who are in tax refund position for reporting compliance. Service-oriented informations are more effective to spur tax reporting compliance than enforcement-oriented information, but there is no different effect on filing compliance