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The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households

Author

Listed:
  • O. Kondratjeva

    (Employment Security Department)

  • S. P. Roll

    (Social Policy Institute, Brown School, Washington University in St. Louis)

  • M. Despard

    (University of North Carolina at Greensboro)

  • M. Grinstein-Weiss

    (Social Policy Institute, Brown School, Washington University in St. Louis)

Abstract

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers in the USA, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

Suggested Citation

  • O. Kondratjeva & S. P. Roll & M. Despard & M. Grinstein-Weiss, 2022. "The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households," Journal of Consumer Policy, Springer, vol. 45(2), pages 239-280, June.
    • Handle: RePEc:kap:jcopol:v:45:y:2022:i:2:d:10.1007_s10603-021-09501-4
    DOI: 10.1007/s10603-021-09501-4
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    Cited by:

    1. Natasha Pilkauskas & Katherine Michelmore & Nicole Kovski & H. Luke Shaefer, 2022. "The Effects of Income on the Economic Wellbeing of Families with Low Incomes: Evidence from the 2021 Expanded Child Tax Credit," NBER Working Papers 30533, National Bureau of Economic Research, Inc.
    2. Natasha V. Pilkauskas & Brian A. Jacob & Elizabeth Rhodes & Katherine Richard & H. Luke Shaefer, 2023. "The COVID Cash Transfer Study: The Impacts of a One‐Time Unconditional Cash Transfer on the Well‐Being of Families Receiving SNAP in Twelve States," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(3), pages 771-795, June.

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    More about this item

    Keywords

    Tax refund delay; PATH Act; Earned Income Tax Credit; Food insecurity; Unsecured debt;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • G50 - Financial Economics - - Household Finance - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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