What happens when the IRS makes an error on your taxes?

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What happens when the IRS makes an error on your taxes?
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The IRS, like any other organization, is prone to goofing up every now and then. In fact, the agency reports that it made 2.1 million math errors in 2015, the latest year for which those stats are available. Of course, that’s a fairly small number considering the total number of taxpayers out there, but if you’re in that relatively small number then it matters a LOT to you.

We previously told you about the provision for taxpayers who can’t pay their tax bills in full. But many people may not also be aware that they have certain protections when it comes to dealing with the IRS. The agency publishes a Taxpayer Bill of Rights, but like anything, it is subject to revisions every few years. The 2017 version stipulates that you have:

  • The right to be informed
  • The right to quality service
  • The right to pay no more than the correct amount of tax
  • The right to challenge the agency’s position and be heard
  • The right to appeal an IRS decision in an independent forum
  • The right to finality
  • The right to privacy
  • The right to confidentiality
  • The right to retain representation
  • The right to a fair and just tax system

If you suspect that the IRS has made a mistake in tabulating your taxes, here’s what you should do:

What to do if you think the IRS has make a mistake on your taxes

If you believe there’s an error on your tax bill: The agency encourages taxpayers to write to the IRS office that sent you the tax notice. You can also call the number listed on the notice or bill. It’s important that you do this within the time frame stated on the notice. To make the process as easy as possible, it’s best provide photocopies of any records in question.

If you spot a mistake after you’ve filed your tax return: Any mistake or change in filing status, income, deductions or credits will likely change your tax bill. Because of this, the IRS wants you to file an amended tax return. In many cases, though, the agency may automatically correct math errors and even accept certain returns without the asked-for forms and schedules. In those cases, you wouldn’t need to file an adjustment unless you disagree with the tax return. And  you’ll typically have 60 days to do so.

If you believe you’ve overpaid your tax bill: From time to time, taxpayers may pay more than what they owe in taxes. The IRS makes a provision for this by allowing you to file a tax adjustment (form 1040X). Generally, you can file a claim for a credit or refund within three years of the date you filed your original return.

Here’s a bonus IRS tip that could save you some money

BONUS: Many people don’t know it, but if you’ve been assessed interest on an outstanding tax bill but the IRS took a long time to investigate it or tell you about it, you can request that the interest be abated (reduced).

RELATED: What to do if you owe the IRS money

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Craig Johnson is a conscious money-saver who still reads paperback books and listens to vinyl. He likes to write about how technology is making things easier and more affordable — but also sometimes more dangerous — for the modern consumer.  You can reach Craig at craig@clark.com
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