The Taxpayer Advocate Service has published an article titled “NTA Blog: Math Error Notices: What You Need to Know and What the IRS Needs to Do to Improve Notices”. The article begins as follows:
Millions of taxpayers have received math error notices adjusting their returns, including the amount of recovery rebate credit (RRC), child tax credit, or other items claimed on their return. As of April 7, 2022, the IRS had issued 9.4 million math error notices of which 8.3 million of these are related to the RRC and the child tax credit. Math error adjustments, whether resulting in assessments of underpayments or reductions of claimed credits, bring with them several significant consequences if taxpayers do not act quickly. This blog will explain the difference between when the IRS makes adjustments using math error authority versus deficiency procedures, what taxpayers need to do when they receive a math error notice, and how the IRS can improve math error notices to better protect taxpayer rights – most notably, the right to be informed.
Deficiency Procedures vs. Math Error Authority
In a typical deficiency determination, if the IRS questions an item on a taxpayer’s return it will conduct an examination and ask the taxpayer to provide an explanation with documentation to substantiate the item(s) in question on their return. After providing this opportunity and reviewing the documentation, the IRS will send what is commonly called a “30-day letter,” which will propose no change if the IRS ultimately finds the explanation, or supporting documentation, provided by the taxpayer sufficient to substantiate the items on the return. However, if the taxpayer does not respond or if the IRS believes the documentation provided cannot support this item, the 30-day letter will propose an adjustment to which the taxpayer can agree, protest and request to go to Appeals, or do nothing, in which case the taxpayer will receive a statutory notice of deficiency, providing 90 days for the taxpayer to file a petition in the U.S. Tax Court. This process is called “deficiency procedures.”
To view the full article, click: “NTA Blog: Math Error Notices: What You Need to Know and What the IRS Needs to Do to Improve Notices”
Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal