The Effects of Prefilled Tax Returns on Taxpayer Compliance

57 Pages Posted: 10 Dec 2018 Last revised: 9 Aug 2019

See all articles by Marcus Doxey

Marcus Doxey

University of Alabama - Culverhouse School of Accountancy

James Lawson

Bucknell University

Shane Stinson

University of Alabama

Date Written: July 2019

Abstract

This study uses two online experiments to examine the potential consequences of a recent U.S. Senate proposal to prefill federal income tax returns on behalf of individuals. Consistent with omission theory, we find that prefilled returns lower compliance compared to self-completed returns when the prefilled returns do not estimate undocumented sources of income (e.g., cash tips). However, our results show that including estimates of undocumented income increases taxpayer compliance relative to self-completed returns. We also find evidence suggesting that prefilled returns eliminate the often-replicated differences in reporting behavior between taxpayers in refund versus tax due settlement positions, suggesting that prefilled returns changed individuals’ reference points. These findings suggest the implementation of a prefilled return policy could have economically important effects on taxpayer decisions.

Keywords: prefilled tax returns; taxpayer compliance; prospect theory; omission theory

Suggested Citation

Doxey, Marcus M and Lawson, James and Stinson, Shane, The Effects of Prefilled Tax Returns on Taxpayer Compliance (July 2019). Available at SSRN: https://ssrn.com/abstract=3285519 or http://dx.doi.org/10.2139/ssrn.3285519

Marcus M Doxey

University of Alabama - Culverhouse School of Accountancy ( email )

Tuscaloosa, AL 35487
United States

James Lawson (Contact Author)

Bucknell University ( email )

701 Moore Ave.
Lewisburg, PA 17837
United States

Shane Stinson

University of Alabama ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

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