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The Effects of IRS Audits on EITC Claimants

Author

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  • Jason DeBacker
  • Bradley T. Heim
  • Anh Tran
  • Alexander Yuskavage

Abstract

The Internal Revenue Service (IRS) devotes substantial resources to audit tax returns of earned income tax credit (EITC) claimants, but little is known about the deterrence effect of these audits. Our paper examines the impact of this tax enforcement on subsequent individual taxpaying among those who claimed an EITC. Using evidence from randomized IRS audits during the 2006-2009 period, we find that EITC participants who are audited show much larger increases in reported income in subsequent years, both compared to a control group of EITC filers and compared to audited filers who were not EITC claimants. We find behavioral impacts on the extensive margin as well, with the probability of a filer claiming an EITC dropping by over 6 percentage points within four years following the audit, as well as changes in filing status and the reported number of dependents.

Suggested Citation

  • Jason DeBacker & Bradley T. Heim & Anh Tran & Alexander Yuskavage, 2018. "The Effects of IRS Audits on EITC Claimants," National Tax Journal, National Tax Association;National Tax Journal, vol. 71(3), pages 451-484, September.
    • Handle: RePEc:ntj:journl:v:71:y:2018:i:3:p:451-484
    DOI: 10.17310/ntj.2018.3.02
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    Cited by:

    1. Hebous, Shafik & Jia, Zhiyang & Løyland, Knut & Thoresen, Thor O. & Øvrum, Arnstein, 2023. "Do Audits Improve Future Tax Compliance in the Absence of Penalties? Evidence from Random Audits in Norway," Journal of Economic Behavior & Organization, Elsevier, vol. 207(C), pages 305-326.
    2. Kasper, Matthias & Rablen, Matthew D., 2023. "Tax compliance after an audit: Higher or lower?," Journal of Economic Behavior & Organization, Elsevier, vol. 207(C), pages 157-171.

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