New Bill Would Force IRS To Explain Errors

IRS building | Image by HABesen/Getty Images

A bill recently filed in Congress aims to make changes to the U.S. Tax Code that could help taxpayers understand recalculations made by the Internal Revenue Service when inspectors identify errors in filings.

The IRS Math and Taxpayer Help Act of 2024 was introduced in the Senate by Sens. Elizabeth Warren (D-MA) and Bill Cassidy (R-LA). It was concurrently submitted in the House by Reps. Randy Feenstra (R-IA) and Brad Schneider (D-IL), reported the Fort Worth Star-Telegram. It would require the IRS to provide detailed information when the agency makes changes to a person’s tax filing, indicating what the errors were and providing a calculation of what the IRS claims the amount owed is.

Current law allows the IRS to make changes, provided the agency notifies the taxpayer. However, the IRS is not required to give details on how and why the changes were made in the first place.

The new bill would “forbid the practice of reporting multiple alternative errors instead of adequately describing the error underlying the adjustment,” per the Star-Telegram.

The Taxpayer Advocate Service (TAS) — an independent organization within the IRS whose purpose is to ensure that every taxpayer is treated fairly — reported that the IRS issued at least 9.4 million math error notices in tax year 2022, per the Star-Telegram. According to IRS data, 8.3 million of those notices were due to errors in computing taxpayer-backed COVID relief payments and child tax credits.

“Math error adjustments, whether resulting in assessments of underpayments or reductions of claimed credits, bring with them … significant consequences if taxpayers do not act quickly,” the TAS noted in 2022.
Taxpayers currently have 60 days to respond to such notices when the IRS issues them. TAS’s head, Erin Collins, an advocate for the IRS providing taxpayers with precise reasons for adjustments, said, “It is key for taxpayers to understand that once the 60-day time period has elapsed and the taxpayer has not requested a reversal, they lose their opportunity to have the matter reviewed by the U.S. Tax Court,” per the Star-Telegram.

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