Automatic Tax Filing: Simulating a Pre-Populated Form 1040
Each year Americans spend over 1.7 billion hours and $33 billion preparing individual tax returns, and these filing costs are regressive. To lower and redistribute the filing burden, some commentators have proposed having the IRS pre-populate tax returns for individuals. We evaluate this hypothetical policy using a large, nationally representative sample of returns filed for tax year 2019. Our baseline results indicate that between 66 and 75 million returns (42 to 48 percent of all returns) could be accurately pre-populated using only current-year information returns and the prior-year return. Accuracy rates decline with income and are higher for taxpayers who have fewer dependents or are unmarried. We also examine 2019 non-filers, finding that pre-populated returns tentatively indicate $8.3 billion in refunds due to 11 million (20 percent) of them.
We thank participants at the Office of Tax Analysis Annual Research Conference, the Georgetown University Law Center Tax Law and Public Finance workshop, and the IRS-TPC Joint Research Conference on Tax Administration for helpful comments. We thank Maxwell Grozovsky for excellent research assistance. This research was conducted while Goodman and Whitten were employees at the U.S. Department of the Treasury, and the research was supported in part by the U.S. Department of Agriculture, Economic Research Service. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and do not necessarily reflect the views or the official positions of the U.S. Department of the Treasury and should not be construed to represent any official USDA or U.S. Government determination or policy. Any taxpayer data used in this research was kept in a secured Treasury or IRS data repository, and all results have been reviewed to ensure that no confidential information is disclosed. The authors declare that they have no relevant financial interests that relate to the research described in this paper. The authors declare that they have no relevant financial interests that relate to the research described in this paper.
- Americans spend an average of $200 and 12.5 hours per year filing individual income tax returns. More than 40 percent of filers,...