March 18, 2018
By Alessandra Malito
Before filing your taxes, check your return for mistakes before submitting it — but what happens if the Internal Revenue Services made a mistake?
It happens, and sometimes the fix is simple while other times it is not. In one Reddit user’s case, the mistake was a bit harrowing, and complicated. He got a letter recently from the IRS claiming he owed the government $20,000 from the 2014 tax year, but he was in high school then, and earned less than $2,000. He believes that the IRS has confused him with his estranged father, his namesake who hasn’t paid taxes in several years, but he’s having trouble resolving this issue with the IRS.
If this is a real letter from the IRS, however, the issue must be resolved. And it wouldn’t be the first mistake the IRS has made. The federal organization expects approximately 155 million individual tax returns this year. The IRS sent out more than 1.6 million notices to taxpayers about math errors on individual returns in 2015 for tax year 2014, according to the latest available data on the IRS’s website. That’s an error rate of just 1%, but it’s still a lot of taxpayers.
Have your paperwork ready
A real letter from the IRS will include instructions on how to respond to the IRS’s claim, as well as a point person, said Laura Scherler, director of financial stability and success at United Way, a national nonprofit organization that promotes community building and financial literacy. If the mistake was made on the IRS’s part, clearly state the error and provide documentation to prove what you filed was accurate.
For example, if your employer sent the IRS two versions of your W-2, the IRS may mistakenly double your earnings, which means doubled the taxes. In that case, write back to the IRS offering your most recent W-2 and stating your adjusted gross income. Taxpayers who do not hear back from the IRS may want to follow up with the representative listed on the letter to address the issue, Scherler said.
When it’s more than math
When the issue isn’t about a math error, but instead involves a misunderstanding or conflicting interpretations of tax law, the IRS is really looking for an agreement with the taxpayer, Scherler said. In this scenario, even after making a solid case with documentation, a taxpayer may have to go back and forth, or respectfully ask for a supervisor, to remedy the situation, she said.
“Depending on the amount the IRS says you owe, you may want to go to a tax professional,” she added. A few hundred dollars or even a thousand dollars may not seem worth it, but if the IRS is claiming you owe $50,000, a professional should have a better sense of how to handle the conflict.
Taxpayers have a bill of rights, according to the federal government, which include the right to be informed, the right to quality service, the right to pay no more than the correct amount of tax and the right to appeal an IRS decision in an independent forum, among others. Each state has at least one local taxpayer advocate office. If a mistake or misinterpretation has not been remedied, a taxpayer may go to court to appeal the IRS’s decision.
The IRS won’t call or email you
Keep in mind, the IRS will only notify a taxpayer of any issues via U.S. mail after Tax Day (April 17) and never by email or phone. If someone receives an email or call from someone claiming they owe more in taxes, that person is likely a scammer, but don’t hang up on them. You’ll want to try to find out if they have sensitive information about you, like your Social Security number.
In that case, the taxpayer should alert the IRS that he or she is a victim of identity theft. They should never follow through with instructions by phone or email to wire money to another bank account. This year, taxpayers should be extra vigilant because last year’s Equifax EFX, -0.13% security breach revealed sensitive information of more than 145 million U.S. adults, which could be used to file returns and siphon refunds.