Stimulus funds triggered hundreds of thousands of IRS ‘math error’ notices
According to financial experts, there has recently been a deluge of “math errors” reports from the IRS that have been confusing and difficult to resolve for taxpayers.
According to the Taxpayer Advocate Service, the IRS sent approximately 9 million such alerts from January 1 to July 15, up from 628,997 in the same period last year. About 7.4 million were related to stimulus payments.
“Solving the problem is a massive problem in itself,” said Larry Harris, certified financial planner and director of tax services at Parsec Financial in Asheville, North Carolina.
As of August 27, there was a backlog of 9.2 million unprocessed individual returns, including 2020 filings with errors, according to the IRS.
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“One of the biggest problems we have is reconciling stimulus payments,” said Dan Herron, a San Luis Obispo, Calif. Based CFP and CPA with Elemental Wealth Advisors.
With multiple payment options and limited tracking, there has been a lot of discrepancy between the IRS and taxpayers, he said.
Math error messages usually reflect an adjustment to someone’s account, such as: B. a balance due or a smaller or larger refund. However, some notes may be missing important details.
“The IRS sends out balance due notices with no calculation or explanation analysis,” Herron said.
Additionally, it can take hours to reach an IRS agent by phone to find out the details, he said.
The IRS received more than 167 million calls during the 2021 filing season, but only 7% of taxpayers reached a representative, the Taxpayer Advocate Service reported.
Contacting the agency was not easy for tax professionals either.
“You disadvantage a lot of people,” said Herron. “Especially those who can’t necessarily afford to have it [a tax professional] sitting on the phone for hours. ”
The IRS did not immediately respond to a request for comment.
But the agency said in a September 3 website update that it is “correcting significantly more errors in tax returns than in previous years” and “will send a return to taxpayers.”
Since 2010, funding for the IRS has fallen 19%, according to the Center on Budget and Policy Priorities.
The agency cut more than 33,378 full-time employees from 2010 to 2020, the IRS reported, and despite the increase in staff since 2019, the workforce is still below 2010 levels.
President Joe Biden proposed $ 80 billion in IRS funding over the next decade to fight tax evasion. The move is still in flux, however, as Congress wrestles over its $ 3.5 trillion budget.
The richest 1% of Americans could evade up to $ 163 billion in taxes each year, according to a Treasury Department report released Tuesday.