The Impact of Tax Refund Delays on the Experience of Hardship and Unsecured Debt
49 Pages Posted: 7 Jul 2020
Date Written: June 4, 2020
The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers, 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, we investigate how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. We find 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, Material Hardship, Medical Hardship, Food Insecurity, Unsecured Debt
JEL Classification: D10, G50, H24, I38, M38
Suggested Citation: Suggested Citation