Most Serious Problems — Math Error Notices176
Legislative
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Most Serious
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Most Litigated
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math errors, providing abatement remedies for taxpayers to contest math errors before paying the tax
and that the taxpayer “must be given an explanation of the asserted error.”
15
Congress, concerned with
the IRS’s use of math error authority where its use was not authorized by statute, also sought to clarify
limits to the IRS’s authority, noting that the summary assessment procedure should not be used to
merely resolve an uncertainty against the taxpayer.
16
Congress provided extensive examples describing
how it envisioned the IRS’s expanded summary assessment authority to work. For instance:
[L]ine 6b of the Form 1040 requires the taxpayer to list, “First names of your dependent
children who lived with you” and then to enter the number of those dependent children in a
column for personal exemptions. If a taxpayer lists three names on line 6b but then enters “4”
in the column, it is not clear whether the taxpayer miscounted (in which case the taxpayer
should have written “3” in the column), or whether the taxpayer erroneously omitted the
name of one of the dependent children (in which case the taxpayer’s column-entry of “4”
would be correct). In this case, the Service should, of course, take steps to determine which
entry is correct, and the taxpayer has the obligation of showing that he or she is entitled to
the number of exemptions claimed. However, this summary assessment procedure is not to
be used where the Service is merely resolving an uncertainty against the taxpayer.
17
Despite this congressional direction, the IRS’s use of math error authority to summarily resolve
increasingly complex issues goes beyond those considered by and allowed by Congress.
18
If the IRS uses
its math error authority to address these more complex issues that may require additional fact-finding,
like correctable error and post-processing, the IRS’s assessments are more likely to be erroneous.
19
Notice unclarity and shorter math error deadlines, along with the expansion of math error authority,
increases the risk of incorrect assessments and erosion of taxpayer rights, such as the right to be informed,
the right to pay no more than the correct amount of tax, and the right to appeal an IRS decision in an
independent forum. Despite this, the Department of Treasury has encouraged the expansion of IRS
math error authority because it is cost efficient and simpler than regular deficiency procedures.
20
15
General Explanation of the Tax Reform Act of 1976, 94th Cong., 2d Sess., 372 (1976).
16
Id.
17
Id.
18
For a discussion on the IRS’s expanded use of math error authority for “correctable errors,” see Nina E. Olson, Why
Correctible Error Authority Raises Significant Taxpayer Rights Concerns – Part 1, NTA Blog (Aug. 9, 2017), https://
taxpayeradvocate.irs.gov/news/why-correctible-authority-error-raises-significant-taxpayer-rights-concerns-part-1; Nina E.
Olson, Correctible Error Authority Part 2: Why Correctible Error Authority Creates More Problems Than It Resolves, NTA Blog
(Aug. 16, 2017), https://taxpayeradvocate.irs.gov/news/correctible-error-authority-part-2-why-correctible-error-authority-
creates-more-problems-than-it-resolves?category=Tax%20News. For a discussion on the IRS’s use of post-processing with
math errors, see Most Serious Problem: Post-Processing Math Error Authority: The IRS Has Failed to Exercise Self-Restraint in
Its Use of Math Error Authority, Thereby Harming Taxpayers, supra.
19
See National Taxpayer Advocate Purple Book: Compilation of Legislative Recommendations to Strengthen Taxpayer Rights and
Improve Tax Administration 44-45 (Continue to Limit the IRS’s Use of “Math Error Authority” to Clear-cut Categories Specified by
Statute) (Dec. 2017); National Taxpayer Advocate 2014 Annual Report to Congress 163-171 (Most Serious Problem: Math
Error Notices: The IRS Does Not Clearly Explain Math Error Adjustments, Making It Difficult for Taxpayers to Understand and
Exercise Their Rights).
20
Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2017 Revenue Proposals, 225-226
(Feb. 2016), https://www.treasury.gov/resource-center/tax-policy/Documents/General-Explanations-FY2017.pdf. See also
National Taxpayer Advocate Purple Book: Compilation of Legislative Recommendations to Strengthen Taxpayer Rights and
Improve Tax Administration 44-45 (Continue to Limit the IRS’s Use of “Math Error Authority” to Clear-cut Categories Specified by
Statute) (Dec. 2017).