IOSR Journal of Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925. Volume 12, Issue 4 Ser. V (Jul. –Aug. 2021), PP 59-68 www.iosrjournals.org DOI: 10.9790/5933-1204055968 www.iosrjournals.org 59 | Page The Effect of Tax Knowledge and Tax Sanctions on Taxpayer Compliance with Risk Preference as a Moderating Variable for Individual Taxpayers at KPP Subulussalam Riyanti Wijaya, Galumbang Hutagalung, Rasinta Ria Ginting (Universitas Prima Indonesia) Abstract: Taxes are used to fund national development and other government spending.Taxes are a type of state revenue that helps to balance governmental expenditures and income. To achieve the tax target, taxpayer compliance is required in paying taxes. Several factors can influence the knowledge of taxation, tax sanctions and risk preferences. The population in this study amounted to 57,974 people. The sample in this study amounted to 381 respondents. The determination of the sample in this study was made using the Convenience Sampling method. This study uses Partial Least Square (PLS). The results showed that knowledge of taxation has a positive and significant effect on taxpayer compliance. The application of tax sanctions also has a positive and significant effect on taxpayer compliance. Risk preference is not a moderating variable that can strengthen or weaken the effect of tax knowledge on individual taxpayer compliance. Risk preference is not a moderating variable that can strengthen or weaken the effect of tax sanctions on individual taxpayer compliance. Keyword: Tax Knowledge, Tax Sanctions, Taxpayer Compliance, Risk Preference --------------------------------------------------------------------------------------------------------------------------------------- Date of Submission: 03-08-2021 Date of Acceptance: 17-08-2021 --------------------------------------------------------------------------------------------------------------------------------------- I. Introduction The Ministry of Finance (Kemenkeu) noted that the realization of tax revenues throughout 2020 only reached Rp. 1,070.0 trillion, or 89.3 percent of the target of Rp. 1,198.8 trillion. With this realization, there will be a shortfall of less than Rp128.8 trillion in 2020. Taxes can be regarded as a mandatory contribution that must be paid by the people to the state and will be used for the benefit of the government and the general public. Taxes have an important function in the economic life of a country, namely as a source of government funds. Where this source of funds is used to carry out development, both the central government and local governments. Then, taxes have a function as a tool that regulates government policies in the socio-economic field. To achieve the tax target, it is necessary to continuously develop public awareness and compliance (taxpayers) to fulfill tax obligations in accordance with applicable regulations. Taxpayer compliance is one of the determining factors in increasing income tax revenue. The low level of tax compliance can be seen from the tax ratio. The Standard Tax Ratio, according to the World Bank, is 15%. Meanwhile, the tax ratio in Indonesia is still below the standard. The following is Indonesia's Tax Ratio data for the last 10 years: Figure 1.1. Indonesia's Tax Ratio Source: www.kemenkeu.go.id