DEVELOPING DECISION RULES TO AID TAX PROFESSIONALS IN AMBIGUOUS PLANNING SITUATIONS

Abstract

In order to allow flexibility in the enforcement of the tax law, the language used is often intentionally vague and ambiguous. This enables the government to implement the intent of the lawmakers in administering that law. However, interpreting these vague and ambiguous laws requires tax professionals to face planning situations that are complex and uncertain. Due to an increase in civil litigation, the importance of tax professionals making defensible decisions has been magnified in recent years. Carnes, et al. (1994) report that tax partners with Big‐Six accounting firms spend about 30 to 45 percent of their time resolving ambiguous tax questions. Therefore, tax professionals could benefit from models or systems (i.e., decision support systems, expert systems, artificial intelligence) that provide decision direction when facing ambiguous tax situations. One such area in which tax professionals must assist their clients is the determination of what levels of compensation are reasonable for owner‐employees of closely‐held corporations (Hagan, et al. 1995).

Citation

Hagan, J.M., de Korvin, A. and Siegel, P.H. (1996), "DEVELOPING DECISION RULES TO AID TAX PROFESSIONALS IN AMBIGUOUS PLANNING SITUATIONS", Managerial Finance, Vol. 22 No. 11, pp. 1-17. https://doi.org/10.1108/eb018588