Congress passes bill to fix IRS ‘math error’ notices

The Senate this week unanimously passed a bill to fix IRS notices for filers who make simple mistakes on their tax returns.

The legislation, known as the Internal Revenue Service Math and Taxpayer Help Act, or IRS MATH Act, cleared the House earlier this year. It is now headed to President Donald Trump’s desk for signature.

Currently, the IRS sends filers so-called math error notices when it finds basic math or clerical mistakes on tax returns. The notices cover the agency’s proposed changes and additional taxes owed.

During tax year 2023, the IRS sent more than 1 million math error notices, for over 1.2 million mistakes, according to the agency’s latest Data Book. By comparison, the IRS sent about 700,000 notices for roughly 850,000 math errors for tax year 2022.

While the new law won’t reduce tax return errors, it could make it easier for taxpayers to understand what went wrong and the next steps to take, experts say.

Taxpayers must respond to math error notices within 60 days or the IRS changes become final. But some lawmakers and other advocates have said the notices are unclear.

“No one should have to spend a fortune on a lawyer or hours trying to figure out what went wrong on their taxes when the IRS already knows the answer,” Sen. Elizabeth Warren, D-Mass., said in a statement Tuesday.

Sen. Bill Cassidy, R-La., said in a statement, “If the IRS thinks someone made an honest mistake filing their taxes, the IRS should be clear about how to correct it.”

The legislation comes as some advocates worry about future taxpayer service amid the government shutdown, IRS furloughs and recent agency staffing cuts.

The IRS has lost 17% to 19% of workers covering “key IRS functions” needed for the filing season, according to a September report from the Treasury Inspector General for Tax Administration.

Typically, you have 60 days to respond to IRS math error notices before the new tax assessment becomes final. At that point, you forgo your right to challenge the agency’s position in tax court.

However, these letters often don’t clearly explain the reason for the tax adjustment and don’t explicitly cover the consequences of failing to respond within 60 days, National Taxpayer Advocate Erin Collins wrote in January in her latest annual report to Congress. 

For tax year 2023, the biggest errors were calculating income tax, including self-employment and household employment taxes, the IRS reported.

The new legislation requires that IRS math error notices must include:

• Description of the error, including the type of mistake.
• Federal tax return line item location for error.
• Itemized computation of the IRS’ proposed change.
• Phone number for automated transcription service.
• Clear deadline to request abatement, or disagreement of taxes due.

“This new law directly addresses long-standing issues with how the IRS communicates and resolves mathematical or clerical errors on tax returns,” Melanie Lauridsen, vice president of tax policy and advocacy with the American Institute of Certified Public Accountants, said in a statement on Wednesday.