Millions of taxpayers who claimed the Recovery Rebate Credit on their 2020 tax returns may have been facing a scary dilemma recently. At least until the Taxpayer Advocacy Service (TAS) stepped in. Over the last few weeks, the Internal Revenue Service (IRS) has issued about five million “math error notices.”
According to a recent TAS report, these letters were sent to the taxpayers who the IRS believes may have claimed the Recovery Rebate Credit in error.
Taxpayers were given the option to file for this rebate on their 2020 taxes if they did not receive the first or second stimulus checks. Or if the taxpayer did not receive the full amounts. The rebate allowed taxpayers who didn’t receive all or a portion of this funding to claim the differences in the tax refund. It’s not an easy formula to file. And, apparently, this option has caused a lot of confusion. Especially regarding just who, exactly, is eligible which in turn resulted in many math errors.
IRS Omits Crucial Information
The IRS recently sent out letters to try and correct such errors. Omitted from these letters, however, is one crucial piece of information. The necessary time limit the recipient has to respond. The IRS rules state that recipients of these types of letters have sixty days to respond or dispute the letter. However, these most recent notes, which were mailed to about five million taxpayers did NOT include this important piece of information.
“It was a clear infringement of a taxpayer’s right to be informed and right to a fair and just tax system,” the writes the TAS of the omission of the critical piece of information in a blog post.
Those who received the “math error” notice from the IRS have the right to dispute the letter. The recipients have sixty days in which to do this. During this time, the IRS reassesses the correction. And, says the TAS, it is because of this process that it is critical the people who receive the letter are aware of the sixty-day window.
Fixing the Problem
“The IRS is doing the right thing,” says the TAS. “And will be issuing a supplemental notice providing taxpayers additional time.”
The TAS added that the extra time will give taxpayers the opportunity to provide necessary documents.
While the letters are problematic due to the lack of information, the TAS notes that the notices are still valid. For more information on this or any other tax-related issue, the TAS blog may provide helpful information.