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When the IRS screws up

May 5, 2022


Think about it: 155 million individual tax returns each year are processed by the Internal Revenue Service. That’s a lot of potential for error. When you take into account all of the people who contribute information to a tax return, that’s an incredible amount of opportunity for mistakes.

Where mistakes are made

 As of March of 2022, the IRS was a year behind in its processing of returns. (Imagine what might happen to you if you sent in your return a year late.) This has created millions of delays and affects refunds for the people who most desperately need them.

Think too, of the families who have lost a loved one and who are still waiting for the IRS to finish the final taxes on the estate. Many groups, including the Taxpayer Advocate Service, have recommended that the IRS update their system to a new scanning technology for faster processing.

The four most common IRS mistakes

The IRS’s most common mistakes are:

  1. Typos
  2. Not documenting your extension
  3. Confusing two different filers who have similar names or SSNs
  4. Losing your return or refund

Mistakes are also made of course by employers, HR departments, the postal service, and even tax preparers. So, if your employer sent the wrong information or sent two W2s, it’s likely the income and the taxes the IRS shows for you will be wrong.

The IRS has also erred on the side of refunding too much. In these cases the IRS has not only expected the money back, but the Service has also asked for interest and penalties. One man was sentenced to prison for spending the money erroneously deposited into his account.

What to do when the IRS fudges

It’s best to put everything in writing. (Plus, it’s really hard to get an IRS representative on the phone.) So, write a letter explaining the error and include documentation. Follow up in a couple of weeks. And then a couple of weeks after that. If you still do not get a response it’s time to file an appeal. At this stage, many people turn to a qualified tax attorney for guidance.