Abstract This paper presents evidence from 7,127 tax returns on the relation between tax preparer usage and taxpayers' prepayment position (refund/balance due) and total prepayments. Prepayment position is measured as total prepayments minus tax liability. Using a two-step estimation procedure that corrects for taxpayers' self-selecting return preparation mode, we find evidence of preparer effects on prepayment position and total prepayments. Specifically, paid-prepared returns have relatively larger refunds and smaller total prepayments. Together, this implies that paid-prepared returns have lower tax liabilities and that the reduction in tax liability is larger than the reduction in total prepayments,
Christian et al. (Tue,) studied this question.