Electronic Filing, Tax Preparers, and Participation in the Earned Income Tax Credit

Wojciech Kopczuk and Cristian Pop-Eleches

No 11768, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In 2002 more than 18 million low-income individual taxpayers received the Earned Income Tax Credit (EITC). Despite its size, non-participation in this program is a concern and substantial effort is devoted by the IRS, local governments and many non-profits to address it. Most of the tax returns for EITC recipients are filed electronically by paid tax preparers who often charge significant fees for their services. Using variation across states in the introduction of state electronic filing programs, we show that the introduction of electronic filing had a significant effect on participation in the EITC. Our results are robust to accounting for other welfare, EITC and IRS reforms introduced during the same period. We suggest that this effect is due to the impact that electronic filing opportunities had on the tax preparation industry, therefore providing an example of how a market-based approach can be effective in addressing the problem of program non-participation.

JEL-codes: H24 I38 (search for similar items in EconPapers)
Date: 2005-11
New Economics Papers: this item is included in nep-ict, nep-pbe and nep-pub
Note: PE
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Citations: View citations in EconPapers (4)

Published as Journal of Public Economics, 2007, 91(7-8), 1351-1367.

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Journal Article: Electronic filing, tax preparers and participation in the Earned Income Tax Credit (2007)
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