IRS to Millions of Taxpayers: You Made a 'Math Error'

Pandemic credits apparently caused a lot of confusion
By John Johnson,  Newser Staff
Posted Sep 6, 2021 2:15 PM CDT
Updated Sep 11, 2021 4:05 PM CDT
IRS Sending Out Millions of 'Math Error' Notices
This 2018, file photo shows a portion of the 1040 US Individual Income Tax Return form.   (AP Photo/Mark Lennihan, File)

Millions of Americans are getting an unwanted letter in the mail from the IRS informing them of a "math error." And in the vast majority of cases, that error works in the government's favor. The agency has sent out 11 million such letters as of mid-August in regard to 2020 returns, reports Fortune. By contrast, it sent out 765,000 letters last year in the same span and 2 million the previous year, notes the Wall Street Journal. Why the big spike with 2020 returns? Apparently, a lot of people got confused when claiming tax breaks related to the pandemic—or Recovery Rebate Credits in IRS-speak—often over eligibility rules. Erin Collins, who runs the Taxpayer Advocate Service (an independent agency within the IRS), estimates that 80% of the error notices revolve around these credits.

Fast Company notes that taxpayers who didn't receive either their first or second stimulus checks could claim them on their returns or get them in their tax refund, and "this option has caused a lot of confusion about eligibility, which has resulted in a lot of legitimate math errors." Plus, there's one more wrinkle. Once people get the letter, they have 60 days to respond before it goes to the agency's collection unit. The letter is supposed to inform people of that deadline, but at least 5 million that went out this year failed to mention it. Those letters will be resent, which will reset the 60-day clock. The time is apparently necessary—the Journal says "the information in math-error notices is often so incomplete that they baffle even tax professionals." (Read more IRS stories.)

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