The IRS has long struggled with taxpayers who either procrastinate and pay late, or put off paying their taxes indefinitely. And knowing they could face stiff fines isn’t enough to make many people pay up. 

Is it even possible to change procrastinators into timely filers? Psychology and behavioral science both say yes, but not through threats of retribution.

A recent research study called The Behavioralist as Tax Collector: Using Natural Field Experiments to Enhance Tax Compliance published as an National Bureau of Economics Research (NBER) working paper, suggests that people are motivated more effectively by the desire to view themselves as good people. If they can do the wrong thing without psychological cost, they often will — but if they experience the psychological pain of feeling like a bad person, they are more likely to do the right thing.

This study made use of field experiments on hundreds of thousands of UK taxpayers, drafting letters to delinquent taxpayers which announced that most other people in the UK pay taxes on time. The letters were personalized so that the delinquent taxpayers understood that they were are a distinct minority in the UK, and that their failure to pay had serious consequences on the country.

The research experimented with different messaging to determine what had the most significant effect: 

  • “Nine out of ten people pay their tax on time.”
  • “Nine out of ten people in the U.K. pay their tax on time.”
  • “Nine out of ten people in the U.K. pay their tax on time. You are currently in the very small minority of people who have not paid us yet.”
  • “Paying tax means we all gain from vital public services like the National Health Service (NHS), roads, and schools.” 
  • “Not paying tax means we all lose out on vital public services like the NHS, roads, and schools.”

Interestingly, the third message had the largest impact. This message effectively communicated that, “If you don’t pay your taxes, you’re a bad citizen, and there aren’t many people as bad as you are.” The statement raised the number of taxpayers making payments by 5.1%.

By making use of psychological principles in a few well-crafted sentences in its letters, the IRS could raise its collection rate.