Reducing tax filing errors

• In Event: Time after time: Lessons from three behavioral science research portfolios in government

Abstract

OES and the Internal Revenue Service (IRS) collaborated in 2020 and 2025 to send different versions of informational letters to paid tax preparers and to clients of tax preparers who likely previously made errors on client returns.

In 2020, sending these letters resulted in an estimated $144 million in cost savings:

First, among preparers who had not received other recent IRS outreach, sending the Letter 5025 reduced the percent of returns with likely errors, the dollar amount of credits claimed with likely errors, and the average total refund amount per preparer. Sending the letter to these preparers resulted in an estimated cost savings of $129 million in filing season 2021. Sending the Letter 5025 had no impact among the preparers who had recently received other IRS outreach. The impacts of the letter did not differ by the version of the letter sent. https://oes.gsa.gov/projects/return-preparer-tax-compliance/

Second, clients sent letters were more likely to change their tax filing behaviors (by not filing or using a different method to file), less likely to claim tax credits with likely errors, and had lower improper payments (measured by refund amount and dollar amount of tax credits claimed with likely errors). The behavioral insights letter increased the likelihood that clients changed their tax filing behaviors beyond sending the business-as-usual-letter but had no differential effect on other outcomes. In contrast, spillover effects of the letter did not change filing behaviors but reduced the likelihood of errors in claiming tax credits and improper payments. Sending letters results in savings of approximately $15.2 million, as measured by reductions in refund amount among clients sent letters ($8.9 million) and clients exposed only to the spillover effects of the letters ($6.3 million). https://oes.gsa.gov/projects/client-tax-compliance/

In 2025, OES and IRS collaborated to assess the relative effectiveness of different modalities of outreach in improving tax compliance among professional tax preparers. We found that a pre-filing season letter coupled with eligibility for a filing-season call or a letter significantly reduced total refund amount and total erroneous dollars claimed. An invitation to a webinar had no effect. We estimate that these low-cost outreach efforts saved the federal government $228.9 million. https://oes.gsa.gov/-reducing-filing-errors-via-outreach-to-preparers/

In a parallel 2025 evaluation, we compared two strategies for improving tax compliance among clients of high-risk tax preparers: (1) sending warning letters to preparers’ clients and (2) conducting outreach directly to preparers. We found that sending letters to clients reduced the dollar amount of likely errors when claiming tax credits by $209 on average, but only among clients who were sent the letter directly—we observed no effects on “spillover” clients not sent letters. Letters and phone calls to preparers alone had no impact, but there is (statistically imprecise) evidence that combining the letters and calls to preparers with letters to their clients does improve tax compliance. Overall, we conclude that sending letters to clients of preparers can reliably improve tax compliance. https://oes.gsa.gov/-reducing-filing-errors-via-outreach-to-preparers-and-clients/

Author

• Julia K Brown, Office of Evaluation Sciences, U.S. General Services Administration
  Presenting Author