Abstract
Purpose. The purpose of this study was to investigate a specific federal taxation policy provision of the United States Internal Revenue Tax Code, the Partnership Taxation statute known as Subchapter K. In addition, the researcher sought to determine any associative or causal relationship between compliance on the return, Form 1065, as determined by the IRS and other elements that make up the preparation and execution of the entire Form 1065. Theoretical framework. A number of theoretical lenses were employed in establishing the framework for this study. Tax Administration Theory, as articulated by Krause (2005) argues that a major thrust of tax system administration is to simultaneously promote equity, reduce complexity in the preparation of tax returns, identify taxable and nontaxable funds and income, and eliminate the excessive costs associated with administering or managing such a system. Fayol (1949) argued that efficiency and equity are achieved when specific administrative principles are the foundation of managerial structures and decision-making systems. Further, Fayol (1949) suggested that streamlining the processes of administration invariably results in reduced costs. Methodology. Primary data were obtained. A survey submitted to Certified Public Accountants and Enrolled Agents was analyzed to determine the perceived degree of complexity and compliance with Subchapter K. Secondary data of studies conducted by the Internal Revenue Service and other researchers were analyzed to complement the findings of the primary data. Findings. The findings suggest there is a significant correlation between complexity and compliance. Additional findings suggest that the return preparers, although experienced Certified Public Accountants and Enrolled Agents, continue to prepare Form 1065 with inadequate knowledge of Subchapter K law. Conclusions and recommendations. The results of this study suggest that tax preparers find Subchapter K and its related Form 1065, Schedule K, and Schedule K-1 complex. This is the first study in which return preparers' understanding of Form 1065 and their expertise in its preparation has been studied. Because the results of this study show there is a disconnect in the way the government collects taxes and the way citizens perceive paying them, there is an urgency to continue studying the reasons for noncompliance.