An Exploratory Investigation of Extrinsic and Intrinsic Motivations in Tax Amnesty Decision-Making

Jonathan Farrar, Cass Hausserman


The tax compliance literature on tax amnesties does not explicitly consider the underlying motivational influences on taxpayers’ self-correction decisions.  Extant tax amnesty studies imply that extrinsic motives are the basis for self-correction, and only a few consider intrinsic motives (Rechberger, Hartner, Kirchler & Hämmerle, 2010; Torgler & Schaltegger, 2005).  Consequently, we explore how extrinsic and intrinsic motives affect tax amnesty decision-making, following an unintentional taxpayer error. We conduct a quasi-experimental conjoint analysis on 1,266 taxpayers and vary the error magnitude. Results indicate that when taxpayers contemplate making a tax amnesty disclosure, desire to avoid a penalty is the most influential extrinsic motive, and responsibility to pay one’s taxes is the most influential intrinsic motive.  Extrinsic (intrinsic) influences account for about two-thirds (one-third) of the overall decision to make a tax amnesty disclosure. We also find that taxpayers’ choices of extrinsic and intrinsic motives do not vary according to tax error magnitude. Implications for tax authorities and tax researchers are discussed.

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