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IRS Stimulus Check #3 - $1,400 per adult and child  More info
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The ‘Math Error’ IRS Notice 2021

The ‘Math Error’ IRS Notice 2021
Ines Zemelman, EA
14 September 2021

11 Million Americans Received Math Error Notices

Over 11 Millions of Americans received a confusing letter from the IRS in 2021 saying they owe more taxes. For most taxpayers, this letter was sent erroneously. In 2019, about 2 million “Math Error” notices were sent to taxpayers. The surge in math-error notices in 2021 isn’t a surprise. The majority of those letters (more than 80%) involve taxpayer claims for Recovery Rebate Credits, the term for stimulus payments claimed on tax returns.

Next year the IRS will face more challenges involving math error notices. In addition to reviewing millions of 2021 stimulus payments, the agency will have to check taxpayers’ reporting of expanded child tax credits, including advance payments received this year. 

Math Errors Are Not Calculation Errors

Contrary to the name, “Math Error” notices are not about calculation errors. They are tax adjustments for a variety of issues detected by IRS computers during return processing. They usually result in tax due, a smaller refund or in some cases a higher refund.

Generally, when the IRS sends letters to taxpayers, they come in several stages. However, to make things even more stressful for taxpayers, for these ‘math errors’ the first notice is also the final notice. If the recipient does not respond within 60 days, it is assumed they agree with additional tax assessment or refund reduction. 

What To Do If You Receive A Math Error Letter

All taxpayers, including those who have not received such letters, should be aware of their rights regarding math-error notices. 

Steps to take:

  1. Check once again your bank account statements for the deposit from the U.S. Treasury in 2020. You may have already received the stimulus amount but did not notice.
  2. If you locate the amount equal or close to the stimulus payment reported as missing - concede with the changes suggested on the IRS letter and pay the requested amount.
  3. If you are confident that the IRS assessment is incorrect - call the IRS as soon as possible to discuss further steps.
  4. One of the possible reasons could be that the check sent to you was deposited and cleared by somebody else
    1. . If this is the case, the IRS will dismiss the assessment and will start their own investigation. You will be asked to complete Form 3911

The bottom line: math-error notices are not going away. The key is an immediate response to the IRS. Deadlines are tight, the IRS phone lines are hard to get through but if you believe the numbers on the letter are incorrect, try your best or hire a tax professional to act on your behalf.   

What Happens Next

If the additional tax is not paid immediately and you did not contact the IRS,  the case goes to the IRS’s collections process, so taxpayers often face liens or levies faster than with conventional audits.

The IRS is streamlining procedures for 2022 based on what it learned this year, in part by sending taxpayers a letter saying what payments they’ve received. But for now the ball is on the taxpayer side and we recommend being proactive.

Ines Zemelman, EA
Founder of TFX