IRS pushes back against math error recommendations

The IRS has pushed back against a federal audit that says it needs to implement further procedures to ensure that math error issues are dealt with promptly.

The Treasury Department’s inspector general for tax administration, in a report released Wednesday, called for the new controls, saying it found no evidence that the IRS had sufficient oversight when it came to math error responses.

As it stands, the IRS is allowed to correct basic math errors, incorrect identification numbers and other clerical mistakes without putting a tax return through the auditing process.

Taxpayers agreed with the IRS’s work in the vast majority — more than 98 percent — of math error cases.

But the inspector general found that, when taxpayers did challenge the agency in those cases, the IRS did not within the prescribed 30 calendar days around 40 percent of the time. The audit also found mistakes in 43 of the 260 math error cases it reviewed.

In addition to calling on the IRS to more closely monitor how quickly it responds to those cases, the reports recommends that the agency give priority to math error cases involving the Earned Income Tax Credit, which is used by lower-income taxpayers.

“Delays in addressing taxpayers’ disputes of math error adjustments could result in taxpayers not timely receiving tax benefits to which they are entitled or in a loss of revenue to the federal government,” the report says.

But the IRS was cool to the report’s recommendations, asserting that it has limited resources and noting that it usually sends interim letters to taxpayers if their cases will not be handled within 30 days.

The agency’s Richard Byrd also noted that the IRS receives some 20 million paper letters each year.

“While important, replies to math errors represent a small fraction of our overall inventory,” Byrd wrote.

For their part, lawmakers on Capitol Hill have touched on math error every now and then in recent months, at times in the discussion over how to best monitor the use of tax credits.

Rep. Charles Boustany Jr. (R-La.), the chairman of the House Ways and Means Oversight subcommittee, signaled in May that Congress should look at whether the IRS should have wider math-error authority.