NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Kara Leibel

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Washington, D.C. , 20002

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Institutional Affiliation: Internal Revenue Service

NBER Working Papers and Publications

March 2018The Effects of EITC Correspondence Audits on Low-Income Earners
with John Guyton, 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...
 
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