This blog was last updated on June 27, 2021
At times, errors in tax compliance processes are simple mistakes rather than misguided ideas about regulations or negligence. While these are honest mistakes, they can still lead to penalties from the IRS. A recent study that will be published in the Journal of Applied Psychology determined the chances of employees forgoing key compliance rules increases as they become busier throughout the day.
The study was conducted by researchers at the University of Pennsylvania’s Wharton School and the University of North Carolina’s Kenan-Flagler Business School, according to the Harvard Business Review. They hypothesized that employees focus less on “professional standards” as they get further into their work day if the they’ve been scheduled for several consecutive days or the job’s intensity is high. Additionally, they theorized this problem could be mitigated if employees take breaks throughout the day.
The benefits of taking a break are often cited among employers, as the CDC reported five minute breaks can improve concentration, work speed and alertness while lowering the risk of on-the-job accidents, eyestrain, soreness and stress.
What the study found
The researchers from the two universities gathered their data from more than 4,000 caregivers at 37 hospitals. They focused on when employees used hand soap and sanitizers by tracking when these devices were used via Proventix, a radio-frequency identification system. The results revealed most employees weren’t compliant with hand-washing standards, and the practice was ignored as working hours and intensity increased. Additionally, the drop in compliance was evident after only a few hours.
“We highlight the immediate costs of work demands that can accumulate within even a few hours of the start of a busy work day,” said study co-author Hengchen Dai. “Our findings are consistent with this notion that this constant switching of gears can wear out our self-regulatory muscles, leading us to focus more on primary tasks and devote less attention to secondary tasks.”
Although the study focused on the hospital industry, Dai explained the implications of the data could be seen in other sectors, from investment banking to oil production.
How employers can respond
With many new tax information reporting regulations and hundreds of forms to file, it is not surprising if staff working within tax and compliance departments slip up every so often. According to the study, lowering the chance of such errors is as easy as stepping away from the desk for a while. Compliance increased if employees had a long rest after a long shift. Sufficient rest is necessary for proper mood regulation, memory and learning, the University of Washington reported.
“After caregivers take a longer break from work, their compliance becomes higher on the subsequent shift,” Dai said. “Based on past research, we would expect that the more relaxed and disengaged from work people feel during a break, the more likely they will be to benefit from taking time off.”
She also said managers should implement a process for reminding employees of their secondary tasks, as well as a means of changing the pace of work throughout the day. Naps were also suggested, and a 2011 report from Fortune revealed many companies are encouraging their employees to nap at work given the longer hours Americans are putting in at the office.
“B” notices and IRS penalties can be a costly nuisance. For the sake of avoiding future tax reporting problems, employers may want to implement some of these practices in order to avoid errors caused by overworked employees. In addition, implementing the tools and technology of a successful and effective tax information reporting solution is another tactic that can make compliance stress-free for employees.
