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The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households

O. Kondratjeva (), S. P. Roll (), M. Despard () and M. Grinstein-Weiss ()
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O. Kondratjeva: Employment Security Department
S. P. Roll: Social Policy Institute, Brown School, Washington University in St. Louis
M. Despard: University of North Carolina at Greensboro
M. Grinstein-Weiss: Social Policy Institute, Brown School, Washington University in St. Louis

Journal of Consumer Policy, 2022, vol. 45, issue 2, No 4, 239-280

Abstract: Abstract The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers in the USA, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

Keywords: Tax refund delay; PATH Act; Earned Income Tax Credit; Food insecurity; Unsecured debt (search for similar items in EconPapers)
JEL-codes: D10 G50 H24 I38 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10603-021-09501-4

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Journal of Consumer Policy is currently edited by Hans Micklitz, John Thøgersen, Lucia A. Reisch, Alan Mathios and Christian Twigg-Flesner

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