Association for Public Policy Analysis & Management

TAS has explored the effect of educational letters on taxpayers’ subsequent compliance with the rules for claiming the Earned Income Tax Credit (EITC) and plans to build on its 2016 and 2017 studies.[1] In these prior studies, the National Taxpayer Advocate sent educational letters to taxpayers who appeared to have erroneously claimed the EITC on their Tax Year (TY) 2014 or 2015 returns. In the 2016 study, the letters were sent to taxpayers who appeared to have made an error on their FY 2014 return prior to the filing of their TY 2015. In the 2017 study, the letters were sent to taxpayers who appeared to have made an error on their TY 2015 return prior to the filing of their TY 2016 return. The letters explained the requirements for claiming EITC and identified the error the taxpayer appeared to have made. The letters were sent to taxpayers who appeared to have made a singular error related to the residency or relationship of the claimed EITC dependent or who claimed an EITC dependent already claimed by another taxpayer. Both studies explored the extent to which the letter affected taxpayers’ compliance on the next tax return.

In the 2017 study, TAS sought to verify the findings of the prior year study, as well as to test the effectiveness of additional information in the letter about eligibility for the childless worker EITC, and to test the effectiveness of offering an additional toll-free help line to a group of taxpayers. With these goals in mind, TAS sent the same letter as in the 2016 study to taxpayers who appeared to have erroneously claimed EITC on their 2015 returns, except that the letter also reminded taxpayers they could be eligible for the childless-worker EITC. In addition, TAS sent a separate letter to an additional group of taxpayers who appeared to have erroneously claimed EITC because the residency test for claiming EITC was not met. The letter to this group was the same as the letter sent to other taxpayers who appeared to not have met the residency test, except that it included a toll-free number taxpayers could call to speak to a TAS employee about their eligibility for EITC.

[1] National Taxpayer Advocate 2016 Annual Report to Congress vol. 2 (Research Study: Study of Subsequent Filing Behavior of Taxpayers Who Claimed Earned Income Tax Credits Apparently in Error and Were Sent an Educational Letter From the National Taxpayer Advocate); National Taxpayer Advocate 2017 Annual Report to Congress vol. 2 (Research Study: Study of Subsequent Filing Behavior of Taxpayers Who Claimed Earned Income Tax Credits (EITC) Apparently In Error and Were Not Audited But Were Sent an Educational Letter From the Taxpayer Advocate Service, Part 2: Validation of Prior Findings and the Effect of an Extra Help Phone Number and a Reminder of Childless-Worker EITC).