The Effects of Refund Anticipation Loans on Tax Filing and EITC Takeup

36 Pages Posted: 30 Jun 2016 Last revised: 7 Aug 2017

See all articles by Andrew T. Hayashi

Andrew T. Hayashi

University of Virginia School of Law

Date Written: June 6, 2016


The IRS has an uneasy relationship with tax return preparers. Preparers may ease the tax filing process and improve take-up of benefits like the earned income tax credit (EITC); however, preparers also profit from financial products sold in connection with tax preparation that have been viewed as exploitative. But can we have a market for low-income tax preparation without such products, and should we? I estimate the effects of regulation curtailing the market for refund anticipation loans (RALs) on a variety of outcomes, including demand for paid tax preparation, EITC take-up, and demand for other financial products, to explore the source of RAL demand and the relationship between RALs and tax compliance. Nearly eliminating RALs reduced demand for paid tax preparation and EITC take-up, and increased demand for an alternative product, which suggests that lack of access to the payment system may be an important driver of RAL demand and that even present-biased individuals may benefit from RALs.

Keywords: EITC, Tax Collection, Tax Compliance, Regulated Industries, Behavioral Public Finance

JEL Classification: H26, K23

Suggested Citation

Hayashi, Andrew T., The Effects of Refund Anticipation Loans on Tax Filing and EITC Takeup (June 6, 2016). Virginia Law and Economics Research Paper No. 2016-9. Available at SSRN: or

Andrew T. Hayashi (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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