Reminders & Recidivism: Evidence from Tax Filing & EITC Participation among Low-Income Nonfilers

John Guyton, Dayanand S. Manoli, Brenda Schafer, Michael Sebastiani

NBER Working Paper No. 21904
Issued in January 2016
NBER Program(s):Public Economics

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.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w21904