IRS ‘Math Error’ Notices Soar Due to Stimulus Payments — Are Child Tax Credits Next?

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The IRS’s terrible, horrible, no good, very bad year appears to have gotten worse amid reports that the agency sent millions of “math-error” notices during the first half of 2021 to taxpayers who made computation errors on their returns. Most of the errors involved federal stimulus payments. Now there are concerns that the same thing will happen next year for recipients of child tax credit payments.

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The IRS sent around nine million math-error notices from Jan. 1 through July 15, CNBC reported, citing data from the Taxpayer Advocate Service. That number is way up from just shy of 629,000 during the same period last year. Roughly 7.4 million of this year’s nine million alerts were related to stimulus payments.

The news won’t do much to endear the IRS to American taxpayers, who already have suffered through lengthy refund delays as the agency works its way through a backlog of unprocessed individual returns that reached 9.2 million as of Aug. 27. Making matters worse: The IRS received more than 167 million phone calls during the 2021 filing season, but only 7% of taxpayers actually reached a live agent, according to the Taxpayer Advocate Service, an independent organization within the IRS.

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When the IRS sends out a math-error notice, it usually involves an adjustment such as a balance due or a bigger or smaller refund. But some of the notices being sent out this year don’t include important information, tax experts say

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“One of the biggest issues we’re having is the reconciliation of stimulus payments,” Dan Herron, a Certified Financial Planner and CPA with Elemental Wealth Advisors, told CNBC. “The IRS is sending out balance due notices with no calculation or explanation analysis.”

Some financial experts worry that similar problems will occur next year with returns that include the 2021 child tax credits.

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As for the error notices being processed now, the IRS noted in a Sept. 3 update on its website that it is “having to correct significantly more errors on tax returns than in previous years.” It went on to say that “if a correction is made to any RRC (Recovery Rebate Credit), EITC (Earned Income Tax Credit) or ACTC (Additional Child Tax Credit) claimed on the return, the IRS will send taxpayers an explanation.”

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In a blog over the summer, the Taxpayer Advocate Service said math-error notices are supposed to inform recipients of the adjustment, correction and balance due or corrected refund amount. The notices also should inform taxpayers of the right to request an abatement within 60 days of the notice being sent.

After receiving the notice, taxpayers can either accept the changes the IRS made and pay the amount due, accept the reduction of a credit or request abatement within 60 days of the notice being sent.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte MagazineStreet & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, will be published in 2021 by Atmosphere Press.

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