Internal Revenue Service
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NBER Working Papers and Publications
|March 2018||Tax Enforcement and Tax Policy: Evidence on Taxpayer Responses to EITC Correspondence Audits|
with John Guyton, Kara Leibel, Dayanand S. Manoli, Ankur Patel, Mark Payne: w24465
Each year, the United States Internal Revenue Service (IRS) sends notices to selected taxpayers who claim Earned Income Tax credit (EITC) benefits to request additional documentation to verify those claims. This paper uses administrative tax data to examine the impacts of these correspondence audits on taxpayer behavior. The quasi-experimental research design compares randomly-selected audited taxpayers to taxpayers with similar risk scores who were not selected for a correspondence audit. The results indicate that, in the years following an audit, there are decreases in the likelihoods of claiming EITC benefits and filing returns. Taxpayers with self-employment income at the time of audit appear likely to increase wage employment following a correspondence audit, while taxpayers with wage...
|January 2016||Reminders & Recidivism: Evidence from Tax Filing & EITC Participation among Low-Income Nonfilers|
with John Guyton, Dayanand S. Manoli, Michael Sebastiani: w21904
This project examines how reminders affect tax filing among lower-income nonfilers (individuals who did not appear on a filed tax return but had income reported by third parties to the Internal Revenue Service). We present novel data on this population and results from two randomized controlled trials. The results demonstrate that one-time reminders increase tax filing, both to claim tax refunds based in part on withholdings and Earned Income Tax Credit benefits, as well as to voluntarily pay balances owed to the IRS. However, these effects do not persist. Consistent with recency effects, individuals who owe a balance due appear more likely to recidivate into nonfiling than those who receive refunds. Follow-up reminders continue to increase tax filing, particularly among individuals who pr...