The Impact of the IRS Audits on Tax Avoidance of the U.S. Firms with R&D Expenditures and Foreign Operations

• Main Authors: Yu-Ting Cheng, 鄭羽婷
• Other Authors: Su-Ming Lin
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/7986e7

碩士 === 國立臺灣大學 === 會計學研究所 === 104 === This study examines the effect of the Internal Revenue Service (IRS) audits on multinational companies with research and development expenditures (R&D). We find that the IRS audits more positively affect multinational R&D companies’ effective tax rate (ETR) compared with other companies’, suggesting that the IRS audits trigger these companies to have less tax avoidance than others. Additionally, we examine the IRS audit impacts on multinational companies’ R&D spending level. We find that the IRS monitoring does not trigger multinational firms with higher R&D scale to have higher ETR. This implies that IRS has more monitoring impact on multinational R&D companies, but the monitoring impacts are negatively related to the companies R&D spending. Surprisingly, after replacing ETR with tax accrual quality, we find that IRS audits trigger multinational R&D companies with higher R&D spending to have higher tax accrual quality. Overall, this study provides some evidence of IRS monitoring on multinational R&D companies’ tax avoidance and tax accrual quality. Hopefully, the evidence could provide implications on companies’ tax planning.