In the age of computers, there’s not much that gets by the IRS. In fact, the IRS is seeking to automate as much as possible to bring relief to its agents. While this is great for them, it can be a nightmare for filers. The result has been a staggering number of computer generated IRS notices being issued often times for mismatches that a human processor would easily figure out. The unfortunate result is a much higher administrative cost to taxpayers who are seeking resolution.
Taxpayer Advocate Service Director Nina Olson has reported that one of the inherent problems with automated matching is that a computer system generates tax notices if it is not able to match up documents with the reporting on your tax return. This could be as simple an issue as correctly reporting income on one schedule while the IRS computer expects to find it on a different schedule. A common complaint we hear from clients is “we are honest, we reported all our income and have only deducted the amounts we are legally allowed to take. Why is the IRS picking on us?” A taxpayer does not need to be guilty of anything or be in error on the reporting of their income or expenses to receive a notice. The IRS notices do have to be responded to in a timely fashion or the notices become increasingly aggressive and threatening in nature.
Many times, even after a taxpayer has responded timely to a notice, they will continue to receive aggressive collection notices while the notice is under review. The cost involved with fighting an IRS notice can be expensive since the process of preparing a response and contacting the IRS can be very time consuming. On hold times are often over an hour. The burden of representation and correcting the IRS notice rests solely on the taxpayer and the IRS accepts no responsibility for the cost incurred to correct an erroneous notice. Many times even if the practitioner gets through, the IRS call center staff may not be able to help.
Budget cuts and poorly trained personnel have led to erroneous answers and frustrated taxpayers with notices that may cost more to fix than to just pay. The Taxpayer Advocacy Service reports the IRS shortcuts not only cost compliant taxpayers to fight frivolous tax notices but these shortcuts undermine fundamental taxpayers rights. The frustration is not only for the taxpayers, IRS personnel are frustrated by heavy workloads, increasingly complex and frequent changes to the tax code and inadequate resources to perform their tasks properly.
If you receive a notice, it does not mean that you automatically owe additional taxes. The IRS automated computer matching program may have generated the notice in error, or the company that sent the source document to the IRS may be in error.
We are here to help navigate the maze of IRS notices.