**3. Tax law complexity and ambiguity**

In practice, many taxpayers are faced with the complexity of tax laws and the uncertainty of enforcement. In most developed countries, tax law is complex, and it requires a very high reading age to be correctly understood [14]. Taxation cost (taxes and compliance cost) is perceived to be much more painful loss for small business taxpayers because they lack sufficient resources to manage their business [15].

If tax laws are vague and complicated, it may be difficult to fully comply with the law even with no intention to evade. Owing to the complex nature, ordinary taxpayers cannot cope well with tax requirements. Sakurai and Braithwaite [16] showed that the most important reason that their survey respondents gave for using tax service was that the desire to avoid the risk of potential tax penalties resulting from inaccurate tax returns. The professional tax knowledge that prevents the taxpayer from unintentional overpayment as well as underpayment can be purchased from the tax practitioners. Thus, an aspect of tax practitioner compliance can be better construed in connection with professional competence that ensures correct tax reporting.

McKerchar [17] maintains that tax complexity is a double edge sword for practitioners: on one side, it induces taxpayers into the arms of practitioners facilitating the market for tax service; but sometimes, it is too much a burden even for them to juggle. Although compliance duties can be addressed more correctly by the tax practitioner, the assistance of the tax practitioner cannot eliminate the risk of inadvertent noncompliance due to the complexity inherent in the law.

Carnes and Cuccia [18] argue that complexity is a source of unintentional noncompliance, and it may represent opportunities for intentional noncompliance as well. More often, tax practitioners can only reduce the uncertainty by assessing the likelihood a tax treatment will be sustained on its merits [19]. That said, inadvertent noncompliance is in part attributable to tax law ambiguity. A tax situation is ambiguous if its proper tax treatment is not *ex-ante* deterministic. Aggressive tax treatment involves a reasonable probability that the reporting position will not be upheld in a tax audit [20]. Aggressive tax practitioners are more likely to interpret the ambiguous tax situation to the benefit of their clients.

Studies on tax practitioner behavior attempt to discover the conditions in which tax advisors would recommend more aggressive reporting position [21]. A number of studies have been conducted investigating factors that impact tax practitioners' willingness to accept aggressive reporting positions; among them are attitude toward risk [22], the threat of penalties [23], and client's risk preference [24]. In particular, Prospect theory [25] may also serve as a theoretical basis to explain tax practitioner's behavior. According to the Prospect theory, people exhibit risk seeking tendency in a loss situation, while being risk averse in a gain situation. Newberry et al. [26] found that CAPs were more likely to sign a tax return containing a large and ambiguous deduction to retain an existing client than to gain new one.

However, tax practitioner studies tend to avoid compliance or noncompliance, directly focusing instead on aggressiveness [27]. Phillips and Sansing [28] underline that conservative and aggressive are *ex-ante* labels that characterize a reporting position when the law is ambiguous. They go on emphasizing that taxpayer compliance is an *ex-post* and hypothetical concept, because in the real world, many of the reporting positions will not be evaluated by tax inspectors. Put differently, contrary to taxpayers' common beliefs, in many cases, tax compliance is not deterministic in spite of tax practitioners being involved, but it is stochastic depending on the enforcement activities of the tax administration.
