Does The IRS Make Mistakes?
Yes – the IRS processes approximately 155 million individual tax returns each year, and errors occur at multiple levels. The scale of these mistakes is notable: the IRS itself identified and sent out 1.6 million notices related to mathematical errors in recent years. While the IRS works to catch mistakes, they can come from many sources, including the IRS itself, employers submitting incorrect W-2s, HR departments making reporting mistakes, or tax preparers entering incorrect information.
If you believe there’s an error on your tax return or IRS notice, our tax consulting services can help you identify and address these issues correctly.
How Often Do IRS Mistakes Really Happen?
IRS mistakes are actually quite rare. In fact, a 2017 study by the Treasury Inspector General for Tax Administration found that the IRS makes errors in less than 1% of the returns it processes. That means that for every 10,000 tax returns filed, the IRS makes an error on just 100 of them.
Of course, even a 1% error rate is still too high for some people. After all, we’re talking about billions of dollars in taxes here. So what happens when the IRS does make a mistake? Well, first of all, it’s important to note that taxpayers are not responsible for paying any interest or penalties on erroneous tax bills. And if you believe that you’ve been incorrectly assessed a tax bill, you can file an appeal with the IRS. The appeals process is designed to give taxpayers a fair hearing and ensure that they are only required to pay taxes that they actually owe.
7 Most Common IRS Errors
- Mathematical errors or typos in calculations or data entry
- Auditor misinterpretation of tax laws and guidelines
- Data entry errors caused by machine scanning, OCR (optical character recognition) software, or human input
- Failure to include all sources of income or deductions claimed on tax returns
- Failure to apply certain tax credits or deductions that taxpayers are eligible for
- Mismatched or incorrectly entered names, Social Security Numbers, or other personal identifiers can delay the processing of returns or credits
- Incorrect application of tax laws to items such as foreign accounts, cryptocurrency, or self-employment income.
How Do You Prove That The IRS Made A Mistake?
Gather your paperwork together. If you find an IRS mistake, write a letter that clearly explains the error and then attach documentation showing that 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 at the 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 are:
- 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 stated 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 and drawn out litigation.
How to Get Help with IRS Errors
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. If your initial attempt to resolve a mistake goes 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.
Expert Tax Defense You Can Trust
The attorneys at Silver Tax Group, led by Chad C. Silver, have over four decades of experience handling federal tax defense cases, including identifying and correcting IRS mistakes. Whether you’ve spotted an error or received an incorrect notice, our team will examine your case, gather the right documentation, and work directly with the IRS to resolve the issue. Contact us today to review your tax situation and protect your rights.
Frequently Asked Questions about IRS Mistakes
Does the IRS make mistakes on refunds and tax returns?
Yes. While the IRS processes nearly 155 million individual tax returns each year, errors occur. The IRS itself sent out 1.6 million notices related to math errors in recent years.
How common are IRS mistakes?
According to a 2017 Treasury Inspector General study, IRS errors occur in less than 1% of processed returns – approximately 100 errors per 10,000 tax returns filed.
What are common IRS mistakes?
Common errors include mathematical calculations, data entry mistakes, auditor misinterpretation of tax laws, failure to include all income sources, incorrect application of tax credits, and mismatched personal identifiers.
What happens if the IRS finds an error on my return?
If the IRS finds an error, they will send you a notice. Taxpayers are not responsible for paying interest or penalties on erroneous tax bills, and you have the right to appeal if you believe the assessment is incorrect.
How do I fix an IRS mistake?
Gather your paperwork, write a letter clearly explaining the error, and attach documentation showing your accurate filing. You should receive a response within several weeks. If not, follow up to prevent the situation from worsening.
Where do I file an appeal?
If a letter and explanation don’t resolve the issue, you can file a written protest with the IRS Office of Appeals. This independent organization provides objective review in resolving tax disputes through programs like Fast Track Settlement and mediation.
What should be included in a formal protest?
A formal protest must include your basic information (name, address, phone), a statement requesting an appeal, a copy of the IRS letter with proposed changes, tax years involved, a list of disputed issues with supporting documentation, and a signed perjury statement.
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