Tax policy colloquium, week 12: Day Manoli's "The Effects of EITC Correspondence Audits on Low-Income Earners"

Today at the colloquium, Day Manoli presented the above-named paper, which can't be posted yet for IRS clearance reasons. But it promises to be of considerable interest when it comes out. It looks at the data around IRS documentation requests to randomly selected taxpayers, within a group that is deemed to present low or intermediate risk scores re. the need for an auditing adjustment, who have claimed the earned income tax credit (EITC).It would probably be premature at this point to discuss the study's particular findings, but the administrative intervention that Manoli et al are studying involves "correspondence audits" in which the IRS sends a letter requiring documentation – say, of claimed earnings or dependents – and failure to respond with the requested items results in the EITC's being denied.EITC denial by reason of the correspondence audits appears to have decreased Type II errors (giving the EITC to those who didn't legally qualify).…

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