The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households

O Kondratjeva; S P Roll; M Despard; M Grinstein-Weiss

doi:10.1007/s10603-021-09501-4

The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households

J Consum Policy (Dordr). 2022;45(2):239-280. doi: 10.1007/s10603-021-09501-4. Epub 2022 Feb 10.

Authors

O Kondratjeva¹, S P Roll², M Despard³, M Grinstein-Weiss²

Affiliations

¹ Employment Security Department, Olympia, WA USA.
² Social Policy Institute, Brown School, Washington University in St. Louis, St. Louis, MO USA.
³ Department of Social Work, University of North Carolina at Greensboro, Greensboro, NC USA.

Abstract

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers in the USA, 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, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

Keywords: Earned Income Tax Credit; Food insecurity; PATH Act; Tax refund delay; Unsecured debt.