Working Paper: NBER ID: w30008
Authors: Lucas Goodman; Katherine Lim; Bruce Sacerdote; Andrew Whitten
Abstract: 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, researchers and policymakers have proposed having the IRS prepopulate 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 $8.2 billion in refunds due to 11 million (20 percent) of them.
Keywords: tax filing; prepopulated returns; tax compliance; nonfilers; refunds
JEL Codes: H0; H2; H24; I3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| availability of accurate information (D83) | success of prepopulation (J11) |
| income levels (J31) | effectiveness of prepopulation (C80) |
| implementation of prepopulated returns (H26) | taxpayer behavior in filing taxes (H26) |
| prepopulation (J11) | marginal value of public funds (MVPF) (H49) |