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The Effects of EITC Correspondence Audits on Low-Income Earners

Author

Listed:
  • John Guyton
  • Kara Leibel
  • Day Manoli
  • Ankur Patel
  • Mark Payne
  • Brenda Schafer

Abstract

This paper studies the impacts of Internal Revenue Service Earned Income Tax Credit (EITC) correspondence (mail) audits on taxpayer behaviors. Risk-based audit selection presents a challenge for estimating behavioral effects, but this is addressed by exploiting some quasi-randomness in aspects of the audit selection process to approximate a randomized controlled trial. The analysis documents widespread disallowance of EITC benefits due to nonresponse and insufficient response. Relative to similar nonaudited taxpayers, audited taxpayers over the years after being audited are less likely to claim EITC benefits and file tax returns, and qualifying children claimed on their returns are more likely to be claimed by other taxpayers. Audited taxpayers also appear less likely to have third-party and self-reported wages, with larger decreases for self-reported wages and for wage levels in the maximum EITC benefit region.

Suggested Citation

  • John Guyton & Kara Leibel & Day Manoli & Ankur Patel & Mark Payne & Brenda Schafer, 2024. "The Effects of EITC Correspondence Audits on Low-Income Earners," Tax Policy and the Economy, University of Chicago Press, vol. 38(1), pages 163-207.
    • Handle: RePEc:ucp:tpolec:doi:10.1086/730055
    DOI: 10.1086/730055
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    Cited by:

    1. is not listed on IDEAS
    2. Julie Berry Cullen & Nicholas Turner & Ebonya Washington, 2021. "Political Alignment, Attitudes toward Government, and Tax Evasion," American Economic Journal: Economic Policy, American Economic Association, vol. 13(3), pages 135-166, August.
    3. Ports, Katie A. & Tang, Shichao & Treves-Kagan, Sarah & Rostad, Whitney, 2021. "Breaking the cycle of Adverse Childhood Experiences (ACEs): Economic position moderates the relationship between mother and child ACE scores among Black and Hispanic families," Children and Youth Services Review, Elsevier, vol. 127(C).

    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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