Legislation introduced to simplify IRS notices

On Thursday, U.S. Sens. Elizabeth Warren (D-MA) and Bill Cassidy (R-LA) introduced legislation that would improve math error notices.

The bill, Internal Revenue Service Math and Taxpayer Health (IRS MATH) Act, would improve a form of vague and confusing communication that notifies taxpayers of reduced tax refunds, resulting in consequences if taxpayers don’t act quickly. A similar bill was introduced in the House by U.S. Reps. Brad Schneider (D-IL) and Randy Feenstra (R-IA).

“Filing your taxes can get confusing — and sometimes, mistakes happen,” Warren said. “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 hardworking Americans can get the money they’re entitled to and get back to their daily lives.”

The Congressmembers said that each year, millions of Americans receive math error notices reducing their tax refunds. However, the notices can be “vague and confusing” because they do not explain what the IRS has corrected, or that taxpayers have only 60 days to challenge the IRS’s position. The lawmakers said they hoped to help taxpayers, especially low-income and non-English speaking Americans.

Currently, Internal Revenue Code allows the IRS to make expedited adjustments to tax returns that contain simple math or clerical errors. Math and clerical adjustments are made automatically and require the taxpayer to initiate responses to contest the notice. If the taxpayer doesn’t contest the notice, the taxpayer forfeits their right to challenge the IRS and the IRS can move forward with its collections process.

“The IRS is confusing enough,” Cassidy said. “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.”

The IRS MATH Act directing the IRS to improve notices of math or clerical errors by identifying the line item the IRS is changing, explain the reason for the change, and list the taxpayer’s required response date. The bill will also require the IRS to notify the taxpayer of abatement determinations, and require the U.S. Treasury Secretary to provide additional procedures for requesting an abatement, and create a pilot program coordinated by the IRS and National Taxpayer Advocate to determine the benefit of sending math or clerical error notices by certified or registered mail.

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