Responding to Mathematical and Clerical Errors

Image result for images of irs noticeAccording to the 2015 IRS Data Book, over 2.1 million math error notices were mailed to individual taxpayers in 2015 concerning tax returns filed for tax year 2014.     Math errors include a variety of conditions such as computational errors, incorrectly transcribed values, and omitted entries identified during the processing of tax returns.

For those of us who have been around long enough, you know that there are various types of Internal Revenue Service (IRS) letters to taxpayers detailing proposed adjustments to a tax return.  In most situations, taxpayers’ have pre-assessment rights under deficiency procedures, such as issuance of a Notice of Deficiency prior to assessment and collection, petitioning the Tax Court, among others.

Image result for images of tax errors

However, under IRC 6213(b)(1), the Internal Revenue Service can assess taxes against taxpayers that are “mathematical or clerical errors”.  Such assessments allow the Internal Revenue Service to assess the tax and move to collection efforts without any pre-assessment rights of the taxpayer.

Why is this an issue?  Well, many proposed assessments by the Internal Revenue Service are significantly incorrect.  In addition, the IRS’ currently struggles opening taxpayer responses, training employees on basic tax law, and at times not supervising employee responses.  Have you gotten the response that clearly shows they didn’t read what you sent?  Not sure how that gets out under a manager review.

Of course, from the tax professional’s perspective, the client may view such proposed adjustments as your mistake causing ill-will with your clients.  So it is worthwhile for us to know how to handle various IRS proposed adjustments to clients’ tax returns.

Tips on Responding to Mathematical or Clerical Adjustments

  1. Under IRC 6213(b)(2), the taxpayer may request abatement of the proposed adjustment due to mathematical or clerical error if done within 60 days of receiving the notice;
  2. In notices proposing adjustments, insert at the top of your response, the following, which requires the Internal Revenue Service to abate the adjustment and follow deficiency procedures for any subsequent assessment:

    “With regards to the issue identified in your letter, under IRC 6213(b)(2), we are requesting that this assessment be abated and that this request is being made within the 60 day period noted under IRC 6213(b)(2).”

  3. Key benefits to requesting abatement:
    • It stops the IRS from moving directly to collection.
    • It preserves your client’s pre-assessment rights, such as appeals and Tax Court.
    • Due to the potential for review of the assessment, the IRS employee is more likely to review the taxpayer’s alternative position on the adjustment.
    • When the response is ignored, the taxpayer has grounds for the Taxpayer Advocate to get involved as under IRM

For more of tax tips and ideas, come to the Tax Alliance Conference in Plano, TX, June 6-8 of 2017.