IRS refuses to update confusing ‘math error’ letters

The Internal Revenue Service (IRS) has declined to add critical information to its so-called math error notices that would make them easier to understand, despite the letters being called out by the Taxpayer Advocate Service as “vague and confusing,” a new report has revealed.

At the end of last year, the office of Erin M. Collins, the National Taxpayer Advocate, recommended that the IRS make a number of clarifying changes to the error notices, which went out to more than 9 million taxpayers this past season. Specifically, as Collins pointed out, math error notices don’t always inform taxpayers of the specific math error in question, but rather provide them with a list of potential errors that might have led the IRS to make an adjustment to their tax returns.

These adjustments, by the way, can sometimes affect the size of a taxpayer’s refund or even lead to the taxpayer owing money, so it’s pretty important that people understand exactly which error they’re being accused of making.

What’s worse, taxpayers only have 60 days to dispute the adjustment before losing their right to do so in U.S. tax court. In addition to providing a specific reason for the math error, the Taxpayer Advocate Service also recommended that the IRS specify the exact timeframe for responding to the notice right up front in the first paragraph, and send the notice by certified or registered mail to ensure timely delivery.

However, the IRS said such changes would be too burdensome or costly, according to a recent report to Congress that outlined Collins’s objectives for 2023.

“The IRS issues millions of math error notices each year for both individual and business taxpayers,” the agency wrote in its response to Collins’s recommendations. “The flow of the notice is purposely designed starting with the cause of the math error and the changes made to the taxpayer’s account. To add a different date to each notice is not feasible from a systemic or resource perspective.”

Certified mail, meanwhile, is “cost prohibitive and does not guarantee customers will receive them faster,” according to the IRS.

In other words, don’t expect these confusing notices to get any less confusing anytime soon. Although the Taxpayer Advocate Service can recommend changes to IRS processes and workflow, it has no authority to mandate them. As Collins’s office revealed in its latest report, the IRS disagreed with the recommended changes to math error notices and the matter is considered closed, at least for now.

These were not only changes that Collins and her office recommended last year. As the report reveals, key objectives for the National Taxpayer Advocate also include automating paper tax returns, making it easier to file taxes electronically, getting the IRS staffed up and better trained, and improving the agency’s notoriously unhelpful telephone service. The good news is, the IRS has agreed with Collins on the need to implement many of these objectives, although doing so will still take funding from Congress in many cases.