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Testing the Effect of Tax Office and Taxpayer Interactions on the Integrity of Refund Claims

Last registered on June 01, 2017
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Pre-Trial

Trial Information

General Information

Title
Testing the Effect of Tax Office and Taxpayer Interactions on the Integrity of Refund Claims
RCT ID
AEARCTR-0000833
Initial registration date
February 24, 2016

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
February 24, 2016, 12:20 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
June 01, 2017, 2:00 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Country
Australia
Region

Primary Investigator

Name
Nicholas Biddle
Affiliation
Australian National University
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Mathias Sinning
PI Affiliation
Australian National University
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2015-10-01
End date
2016-05-31
Keywords
Governance
Additional Keywords
Tax Administration, Tax Compliance
JEL code(s)
H25, H26, H83
Secondary IDs
Abstract
To ensure that businesses pay the correct amount of tax, the Australian Taxation Office (ATO) may contact businesses if a transaction varies considerably from normal business activity. Businesses may receive a personalized letter from the ATO asking them to review the amounts on their business activity statement and to get back to the ATO if an error occurred. The aim of this trial is to test the effect of changes to letters on response rates of taxpayers, the timing of payments and the amount of payments of liabilities. The interventions are: (1) changing due dates, (2) addressing social norms, (3) using a different color and (4) informing taxpayers about tax deductible donations. The ATO sent out 3,000 letters on 12 November 2015. 600 letters were sent to each of the four randomly selected treatment groups; the remaining 600 letters were sent to the control group.
External Link(s)

Registration Citation

Citation
Biddle, Nicholas and Mathias Sinning. 2017. "Testing the Effect of Tax Office and Taxpayer Interactions on the Integrity of Refund Claims." AEA RCT Registry. June 01. https://doi.org/10.1257/rct.833-2.0
Former Citation
Biddle, Nicholas and Mathias Sinning. 2017. "Testing the Effect of Tax Office and Taxpayer Interactions on the Integrity of Refund Claims." AEA RCT Registry. June 01. https://www.socialscienceregistry.org/trials/833/history/18194
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Experimental Details

Interventions

Intervention(s)
Four interventions will be studied: (1) changing the due date, (2) addressing social norms, (3) using a different color and (4) informing taxpayers about tax deductible donations. Each intervention will involve a single change in letter content or style. The treatment effect of each intervention will be measured by comparing average outcomes between treatment and control group. No interaction between treatments will be tested. Sample letters are included in Appendix A of the analysis plan.
Intervention Start Date
2015-11-12
Intervention End Date
2016-02-24

Primary Outcomes

Primary Outcomes (end points)
Key outcome variables are:

- The total amount of payments made by the taxpayer after 12 November 2015
- The amount declared on the revised business activity statement
- The net amount of GST on the original business activity statement minus the amount declared on the revised business activity statement
- The revised net amount of all taxation items declared on the business activity statement
- The net amount of the tax for the period to be paid by the taxpayer or refunded by the Commissioner minus the revised net amount of all taxation items declared on the business activity statement
- A variable indicating whether the amount declared on the revised business activity statement was in favor of the ATO or the taxpayer
- A variable indicating whether the revision of the net amount of all taxation items declared on the business activity statement was in favor of the ATO or the taxpayer
- The number of payments made by the taxpayer after the 12 November 2015
- The number of days until the first payment was received from the taxpayer after 12 November 2015

Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
3000 letters were sent out on 12 November 2015. 600 letters were sent to each of the four randomly selected treatment groups; the remaining 600 letters were sent to the control group. Randomization was based on a random variable generator in Stata, using a random choice of the underlying seed.
Experimental Design Details
Randomization Method
Randomization was based on a random variable generator in Stata, using a random choice of the underlying seed. A copy of the Stata code that has been written to randomly assign taxpayers to treatment and control groups is included in Appendix B of the analysis plan.
Randomization Unit
Taxpayer level
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
3000 taxpayers
Sample size: planned number of observations
3000 taxpayers
Sample size (or number of clusters) by treatment arms
3000 taxpayers; Treatment group 1: 600 taxpayers; Treatment group 2: 600 taxpayers; Treatment group 3: 600 taxpayers; Treatment group 4: 600 taxpayers; Control group: 600 taxpayers.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
We have chosen to assign about 600 clients to each treatment and control group. We make the following assumptions: standard deviation in each group=0.6, significance level=0.05, power=0.8, population mean of the control group=0, population mean of the treatment group=0.1. The power calculations were done in Stata. The estimated sample size to detect a minimum effect of 0.1 is 1134 (567 observations per group).
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Humanities and Social Sciences Delegated Ethics Review Committee of the Australian National University
IRB Approval Date
2016-02-10
IRB Approval Number
2016/029
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
February 24, 2016, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
February 24, 2016, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
2,938 taxpayers
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
2,938 taxpayers
Final Sample Size (or Number of Clusters) by Treatment Arms
treatment 1: 585 taxpayers, treatment 2: 589 taxpayers, treatment 3: 588 taxpayers, treatment 4: 587 taxpayers, control: 589 taxpayers
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
This paper presents the findings of two Randomized Controlled Trials (RCTs) that were conducted in collaboration with the Australian Taxation Office (ATO). The first trial tests the effect of changes to letters (timing, social norms, color, and provision of information about charitable donations) on response rates of businesses, the timing of payments and the amount of tax debt payments. The second trial consists of two parts. The first part aims to raise awareness of the relevance of tax debt payment by changing internal guidelines used by field auditors. The second part focuses on studying the effect of changing the phone script used by desk auditors to offer assistance with payment arrangements and simplifying a follow-up letter. The findings of the first trial indicate that none of the treatments had a significant effect on any of the outcome measures considered. In contrast, the results of the second trial indicate that changing the phone script of desk auditors and simplifying the follow-up letter reduced the proportion of default assessments raised by the ATO significantly, suggesting that businesses are responsive to certain types of nudges.
Citation
Biddle, Nicholas, Fels, Katja, and Mathias Sinning (2017): Behavioral Insights and Business Taxation: Evidence from Two Randomized Controlled Trials, Tax and Transfer Policy Institute (TTPI) Working Paper No. 2/2017, Australian National University.
URL
https://taxpolicy.crawford.anu.edu.au/sites/default/files/publication/taxstudies_crawford_anu_edu_au/2017-06/complete_bi_biddle-fels-sinning.pdf

Reports & Other Materials