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Study: IRS Has Ability to Accurately Autofill Over 40 Percent of Individual Tax Returns

Ruth Singleton
Published Date:
May 9, 2022


A study by the National Bureau of Economic Research has found that the IRS has the capability to accurately autofill between 62 and 73 million individual returns (41 to 48 percent of them) using only current-year information returns and the prior-year return. The study’s authors used a random sample of 344,400 individual income tax returns for 2019 constructed by the Statistics of Income Division of the IRS.  

The authors found that “success rates are much higher for low- and moderate-income taxpayers and those who do not have unobserved deductions or self-employment income,” explaining that “The higher rates of failure for higher-income taxpayers are largely driven by increasing rates of itemized deductions, which cause a divergence between pre-populated and actual returns."

CNBC reported that the Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, reducing the number of filers who itemize. In 2019, almost 90 percent of taxpayers used the standard deduction, according to the IRS.

The study’s authors are Lucas Goodman and Andrew Whitten of the Treasury Departments’ Office of Tax Analysis; Katherine Lim of the Minneapolis Federal Reserve Bank; and Bruce Sacerdote of Dartmouth College’s Department of Economics. They concluded that “most taxpayers could benefit from a pre-populated system by receiving a return with a large number of lines correctly pre-populated as most inaccurate returns have precisely one aspect (i.e., one line or one schedule) of the return that requires editing.” 

The authors also found that such a system could benefit non-filers, writing, “Beyond the time and cost savings to current filers, another potential benefit of pre-populated returns is that they could be created for current non-filers, potentially nudging them into claiming refunds or paying taxes due. For tax year 2019, we find 46.3 million individuals who received an information return, did not file a tax return, and did not appear not to have a filing obligation based on income on their information returns. Our pre-populated returns indicate that 17 percent (8.0 million) of these individuals are entitled to a refund, with an average potential refund of $387. We additionally identify 8.8 million non-filers who appear to have a filing obligation based on their information returns. Among this population, 55 percent (4.9 million) appear to have a balance due.” The authors cited a study finding that “non-filers are more likely to file after receiving a reminder,” and suggested that “pre populated returns may provide this reminder.”

CNBC reported, based on Tax Policy Center estimates, that 36 countries had return-free filing as of May 2020, including Germany, Japan and the United Kingdom. 

CNBC also reported that 70 percent of Americans—those with an adjusted gross income of $73,000 or less —are eligible for IRS Free File. Yet only 2.6 percent of Americans used this service in 2019, according to the IRS

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