Internal Revenue Service
Research, Applied Analytics,and Statistics
77 K Street, NE
Washington, DC 20002
Institutional Affiliation: Internal Revenue Service
NBER Working Papers and Publications
|March 2018||The Effects of EITC Correspondence Audits on Low-Income Earners|
with Kara Leibel, Dayanand S. Manoli, Ankur Patel, Mark Payne, Brenda Schafer: w24465
Each year, the United States Internal Revenue Service identifies taxpayers who may have erroneously claimed Earned Income Tax credit (EITC) benefits and requests additional documentation from these taxpayers to verify these claims. This paper exploits random variation inherent in audit selection processes to estimate the impacts of these EITC correspondence audits on taxpayer behaviors. Roughly 80% of EITC correspondence audits in the analysis sample have full disallowances due to undelivered mail, nonresponse or insufficient response. Cases of disallowances with confirmed ineligibility make up 15% of EITC correspondence audits in the analysis sample. In years after being audited, taxpayers have decreases in the likelihoods of claiming EITC benefits and filing tax returns so that they subs...
|February 2018||Heard it Through the Grapevine: Direct and Network Effects of a Tax Enforcement Field Experiment|
with William C. Boning, Ronald H. Hodge, II, Joel Slemrod, Ugo Troiano: w24305
Tax enforcement may affect both the behavior of those directly treated and of some taxpayers not directly treated but linked via a network to those who are treated. A large-scale randomized field experiment enables us to examine both the direct and network effects of letters and in-person visits on withheld income and payroll tax remittances by at-risk firms. Visited firms remit substantially more tax. Their tax preparers’ other clients also remit slightly more tax, while their subsidiaries remit slightly less. Letters have a much smaller direct effect and no network effects, yet may improve compliance at lower cost.
|January 2016||Reminders & Recidivism: Evidence from Tax Filing & EITC Participation among Low-Income Nonfilers|
with Dayanand S. Manoli, Brenda Schafer, 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...