Tax-compliance reminder letter A/B

What we already know

Tax authorities in the UK, US, Indonesia, and the Dominican Republic have repeatedly found that redesigning the wording of overdue-tax letters can increase on-time payment by 3–10 percentage points. Social-norm framing ('most people in your area pay on time') and simplification (clearer next steps, larger 'pay now' link) tend to work; deterrence-only framing has more mixed results.

Hypothesis

Taxpayers receiving a redesigned letter — either social-norm framed or simplification-focused — will be 3–7 percentage points more likely to pay before the deadline than taxpayers receiving the standard letter.

Intervention

Three-arm design: (1) control (current agency letter), (2) social-norm arm (adds 'X% of [city] residents have already paid'), (3) simplification arm (single-page redesigned letter with a prominent 'Pay now' link / QR code and removed legal boilerplate moved to a separate enclosure).

Comparison / control

The agency's current standard reminder letter, sent on the existing schedule.

Outcomes

Primary

Payment before the legal deadline (binary).

Secondary

• Days from letter receipt to payment
• Payment via online portal vs. mail-in
• Subsequent year compliance

Required sample size

Computed for α = 0.05, 80% power, balanced allocation. Pick the row whose baseline best matches your jurisdiction, then size at the MDE you can defend.

Need a custom value? Use the sample-size calculator.

Randomization

1. Identify taxpayers with outstanding balances at the start of the reminder window.
2. Stratify by amount owed (binned), residential vs. commercial, and history of prior late payments.
3. Randomly assign 1:1:1 to control, social-norm, or simplification arms.
4. Print letters with arm-specific templates from a single mailing batch to control for mailing-day effects.

Data collection

1. Daily payment data from the agency's existing collection system.
2. Track which letter each taxpayer received (assignment table).
3. Measure outcomes at the legal deadline and 30 days later.

IRB / ethics

Tax-letter A/B tests are routinely treated as program evaluation rather than human-subjects research in most jurisdictions. All arms receive a legally compliant reminder; no taxpayer is denied information they would otherwise receive. Confirm with your jurisdiction's general counsel that the redesigned letters meet statutory notice requirements.

Common pitfalls

• Statutory notice rules: some jurisdictions require specific language in tax letters. Redesigned versions must still include it — usually they can, but check first.
• Selection: do not test only on first-time late filers; the result may not generalize.
• Reading level: simplification arms should be reading-level tested. A letter that's 'simpler' to a lawyer may be illegible to a typical taxpayer.

Anchor evidence — registry entries this template draws from

• Social Norm Tax Letters

  Dominican Tax Authority (DGII) · Dominican Republic · 2019 · Effect: Treated firms paid $184 million more than controls (0.22% of GDP)

• Simplified Tax Penalty Payment

  Indonesia Directorate General of Taxes · Indonesia · 2022 · Effect: Simplification arm: +32% timely settlement vs. control; Deterrence: +27%

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