The effects of IRS audits on EITC claimants Jason DeBacker, Bradley T. Heim, Anh Tran and Alexander Yuskavage
Contributor(s): DeBacker, Jason
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Material type: 
ArticlePublisher: 2018Subject(s): RENTA | RENDIMIENTOS DE TRABAJO | IMPUESTOS | INSPECCION TRIBUTARIA | EVASION FISCAL | ESTADOS UNIDOS | ELUSION FISCALOnline resources: Click here to access online
In:
National Tax Journal v. 71, n. 3, September 2018, p. 451-484Summary: The Internal Revenue Service (IRS) devotes substantial resources to audit tax returns of earned income tax credit (EITC) claimants, but little is known about the deterrence effect of these audits. Our paper examines the impact of this tax enforcement on subsequent individual taxpaying among those who claimed an EITC. Using evidence from randomized IRS audits during the 2006-2009 period, we find that EITC participants who are audited show much larger increases in reported income in subsequent years, both compared to a control group of EITC filers and compared to audited filers who were not EITC claimants. We find behavioral impacts on the extensive margin as well, with the probability of a filer claiming an EITC dropping by over 6 percentage points within four years following the audit, as well as changes in filing status and the reported number of dependents.
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| OP 233/2018/2-5 More than they realize | OP 233/2018/3 National Tax Journal | OP 233/2018/3-1 Tax incidence in a vertical supply chain | OP 233/2018/3-2 The effects of IRS audits on EITC claimants | OP 233/2018/3-3 "Home sweet home" versus international tax planning | OP 233/2018/3-4 State and local property, income and sales tax elasticity | OP 233/2018/3-5 The effects of penalty information on tax compliance |
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Bibliografía.
The Internal Revenue Service (IRS) devotes substantial resources to audit tax returns of earned income tax credit (EITC) claimants, but little is known about the deterrence effect of these audits. Our paper examines the impact of this tax enforcement on subsequent individual taxpaying among those who claimed an EITC. Using evidence from randomized IRS audits during the 2006-2009 period, we find that EITC participants who are audited show much larger increases in reported income in subsequent years, both compared to a control group of EITC filers and compared to audited filers who were not EITC claimants. We find behavioral impacts on the extensive margin as well, with the probability of a filer claiming an EITC dropping by over 6 percentage points within four years following the audit, as well as changes in filing status and the reported number of dependents.
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