The Senate has passed a bill that aims to revise the way the IRS notifies taxpayers about basic errors on their tax returns. Known as the Internal Revenue Service Mathematics and Taxpayer Assistance Act—or the IRS MATH Act—it made its way through the House earlier this year and is now awaiting the President’s signature.
Currently, if the IRS detects a simple mathematical or clerical mistake on a tax return, it sends a “mathematical error notice.” This notification outlines the changes the IRS intends to make, and any additional taxes owed due to those corrections.
For the tax year 2023, the IRS reported that over 1.2 million notifications have already been sent out, which is a significant increase from the 700,000 notices issued the prior year for approximately 850,000 miscalculations. Experts believe that while this new law may not reduce the number of errors, it could simplify the process for taxpayers to understand mistakes and next steps.
Taxpayers have 60 days to respond to these miscalculation notices; if they don’t, the proposed IRS changes become final. However, some lawmakers argue that the current notices can be vague. Senator Elizabeth Warren remarked that it shouldn’t be necessary to hire legal help or spend excessive time deciphering tax mistakes when the IRS already has the answers. Similarly, Senator Bill Cassidy emphasized the need for clearer guidance on how to correct genuine mistakes.
This legislation comes at a time when there are concerns about taxpayer services, especially with the potential for government shutdowns and workforce reductions at the IRS. A recent report from the Treasury Department indicated a notable loss of staff responsible for key functions during tax filing seasons.
Understanding IRS “mathematical error” notifications
Normally, taxpayers have a 60-day window to reply to IRS mathematical error notifications before finalizing a new tax assessment, which forfeits their right to contest the agency’s stance in court. Unfortunately, these letters often lack clarity regarding the reasons for the tax adjustments or the implications of missing the 60-day window, as noted by tax advocate Erin Collins.
The most common errors for the 2023 tax year were related to income tax calculations, including aspects of self-employment tax.
Changes to mathematical error notifications
Under the new law, IRS mathematical error notices will now include:
- A description of the error, detailing the type of mistake
- The location of the errors on the federal tax return
- An itemized calculation of proposed IRS changes
- A phone number for automatic transcription services
- Clarification on the deadline for requesting adjustments or disputing tax amounts
Melanie Laurissen from the American Institute of Certified Public Accountants noted that this new law directly addresses long-standing issues in IRS communication regarding mathematical or clerical errors.
