Working Paper: NBER ID: w21904
Authors: John Guyton; Dayanand S. Manoli; Brenda Schafer; Michael Sebastiani
Abstract: This project examines how reminders affect tax filing among lower-income nonfilers (individuals who did not appear on a filed tax return but had income reported by third parties to the Internal Revenue Service). We present novel data on this population and results from two randomized controlled trials. The results demonstrate that one-time reminders increase tax filing, both to claim tax refunds based in part on withholdings and Earned Income Tax Credit benefits, as well as to voluntarily pay balances owed to the IRS. However, these effects do not persist. Consistent with recency effects, individuals who owe a balance due appear more likely to recidivate into nonfiling than those who receive refunds. Follow-up reminders continue to increase tax filing, particularly among individuals who previously had to pay balances to the IRS instead of receive refunds.
Keywords: reminders; tax filing; EITC; low-income; nonfilers
JEL Codes: D81; H24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| past experiences (C92) | receptiveness to reminders (D91) |
| reminders (Y60) | tax filing rates (H26) |
| one-time reminders (Y60) | immediate effects on filing behavior (D91) |
| one-time reminders (Y60) | not persistent effects on filing behavior (D91) |
| repeated reminders (Y60) | reduce recidivism into nonfiling (K40) |