Senators introduce bill to simplify IRS notices

A pair of prominent lawmakers, Sen. Bill Cassidy, R-Louisiana, and Elizabeth Warren, D-Massachusetts, teamed up to introduce legislation aimed at making math error notices from the Internal Revenue Service easier to understand.

Every year millions of individual taxpayers receive math error notices in the mail about how their tax refunds have been reduced but they often find the notices vague and confusing because the documents don’t clearly explain which error the IRS has corrected or that taxpayers have only 60 days to challenge the IRS’s position. The goal of the legislation, dubbed the Internal Revenue Service Math and Taxpayer Health (IRS MATH) Act, is to help taxpayers, especially those who can’t afford lawyers or accountants, cope with the complex correspondence process. The lawmakers are urging the IRS to build on the improvements made this past tax season by fixing long-standing issues with math error notices.

“Filing your taxes can get confusing — and sometimes, mistakes happen,” Warren said in a statement Monday. “And when they do, taxpayers shouldn’t be forced to decipher confusing, intimidating, and financially impactful letters from the IRS. It’s time to improve procedures and notices that correct these errors so that hard-working Americans can get the money they’re entitled to and get back to their daily lives.” 

The Internal Revenue Code enables the IRS to make math error corrections on an expedited basis to tax returns with simple math or clerical errors. Unlike other adjustments made after a notice period that can be challenged in U.S. Tax Court, math and clerical adjustments are made automatically and require taxpayers to initiate responses to reverse them within 60 days. However, if taxpayers don’t contest the notice within the 60-day time period, they forfeit their right to challenge it and the IRS can move forward with its normal collections process. The notices often list a number of potential errors that may have been made instead of specifying the exact issue, and they typically don’t notify taxpayers of how to contest the IRS adjustment. That can compound errors on future tax returns and present more risks to taxpayers. 

The IRS MATH Act addresses these problems for taxpayers by directing the IRS to improve notices of math or clerical errors, require notices to identify the line item the IRS is changing, explain the reason for the change, and clearly list the taxpayer’s required response date. The bill would also require the IRS to notify the taxpayer of abatement determinations, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person. In addition, the bill would create a pilot program coordinated by the IRS and the National Taxpayer Advocate to determine the benefit of sending math or clerical error notices by certified or registered mail.

“The IRS is confusing enough,” Cassidy said in a statement Monday. “If there’s a mistake on a tax return, the IRS needs to explain it in plain English and there must be clear lines of communication. Taxpayers should have every opportunity to keep their hard-earned income.”

A companion bill in the House has been introduced by another bipartisan pair of lawmakers: Rep. Brad Schneider, D-Illinois, and Randy Feenstra, R-Iowa.