California Policy Lab

A sizable tax gap (taxes owed to California, but not reported) exists in California partly because some taxpayers may misrepresent self-reported elements on their return, such as their income and deductions to reduce their tax liability. Building off of previous research on honesty “nudges,” the California Policy Lab and California Franchise Tax Board, in partnership with a tax preparation software provider, conducted a randomized control trial to test the impact on tax filer behavior of presenting an honesty and accuracy nudge at the beginning of the tax preparation process. The nudge reminded taxpayers of their responsibility to complete the return accurately and honestly, and was intended to keep this responsibility in the forefront of their minds while completing returns. The nudge did not produce detectible changes in income reporting or taxes paid.

This work has been supported, in part, by the University of California Multicampus Research Programs and Initiatives grant MRP-19-600774.