AbstractProduct-harm crises represent pervasive corporate challenges and influence a wide range of managerial decisions. This study examines the effect of such crises on firms’ tax reporting practices. We find that firm-years with product recalls exhibit significant decreases in tax reserves and effective tax rate compared to control firm-years. These decreases are stronger for recalls occurring closer to year-end, suggesting that firms leverage tax reporting as a last-chance earnings management tool in response to recalls. These findings reveal product market disruptions as important economic events driving firms’ tax reporting practices.