Does The IRS Make Mistakes?

The IRS processes nearly 155 million individual tax returns each year. It catches enough errors or supposed errors itself that it sent out 1.6 million notices related to math errors a few years ago. Even though the Service focuses on catching these mistakes, it also can make them. And it isn't only the Service that makes them, employers, HR departments and tax preparers make them.

We often encounter tax problems and audit situations that started with a simple mistake. It isn't initially caught and then the problem grows. It is only identified when it's become a back tax bill of thousands of dollars. There are options available.

How Do You Prove A Mistake?

Gather your paperwork together. If you find an IRS mistake, write a letter that clearly explains the error and then attach the documentation that shows what you filed was accurate.

If your employer accidentally sent two versions of a W-2, the IRS might double your income and assess a significant tax bill. By writing to explain the error and attaching documentation, you can often resolve the issue. You should receive a response in several weeks. If you do not, it is crucial to follow up or the situation could get worse.

Where Do You File An Appeal?

When a letter and explanation does not solve the issue, the next step is often to file a written protest with the IRS Office of Appeals. This independent organization provides an objective point of view in resolving tax disputes. Programs such as Fast Track Settlement and mediation often can resolve issues as early stages of an audit or collection efforts.

What Do You Need To Include On A Formal Protest?

Before filing a formal protest, it is often helpful to seek legal advice to ensure you make the strongest possible argument with the first appeal. Some of the things that must be included in a protest include:

  • The basics: your name, address, phone, a statement asking to appeal IRS findings to the Office of Appeals, copy of the IRS letter with proposed changes and tax years involved
  • A list of issues: Address each argument individually along with the reason you disagreed and any facts or law that support your position. Add any documentation that supports your position.
  • Perjury statement: Include a statement that states: "under the penalties of perjury, I declare that the facts states in this protest and any accompanying documents are true, correct, and complete to the best of my knowledge and belief." Sign under this statement.

With any administrative hearing process, it is important to lead with your strongest arguments. And when you worry that the IRS did not correctly apply the law to your situation, individualized legal counsel may be the difference between winning early or long, drawn out litigation.

Fixing A Mistake

Fixing a mistake with the IRS is not quite as easy as a billing error with a local company. It can be extremely difficult to reach an agent as well. When your initial attempt to resolve a mistake go nowhere, get a free consultation from a tax attorney.

Send an email to get more personalized legal advice, so you can decide on next steps.