As taxpayers prepare to file their 2021 tax returns, we note that the IRS recently announced in IRS Tax Tip 2022-17, February 1, 2022 (“the Tax Tip”), that it is “committed to ensuring that taxpayers pay no more than the correct amount of tax.” Taxpayers’ “right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all payments properly” is one of 10 core taxpayers’ rights which together comprise the Taxpayer Bill of Rights. See IRS Publication 1, Your Rights as a Taxpayer.
The Tax Tip, and its links to other IRS website pages, outlines issues taxpayers should know about their right to pay no more than the correct tax owed:
If a taxpayer believes they have overpaid their taxes, they can file a claim for refund with the IRS, but must do so within a specific time frame. Generally, taxpayers must file a claim for a credit or refund within three years from the date they filed their original return or two years from the date they paid the tax, whichever is later. More information can be found in IRS Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.
If a taxpayer receives a notice or bill from the IRS and believes it contains an error, they should write to the IRS office that sent the document within the time specified in that document. The notice or bill will often list a telephone number which the taxpayer can call to speak to an IRS representative. The IRS may request copies of financial documentation in order for it to conclude that there was an error. If the IRS confirms that the original notice or bill was erroneous, they will make the necessary adjustment to the taxpayer’s account and issue a corrected notice or bill.
The Tax Tip states that a taxpayer “can” file an amended return if they discover an error in a previously-filed return, but it should be noted that there is, in fact, no legal obligation for a taxpayer to file an amended return—but a taxpayer may do so if this is advantageous. If there is a math error on a return, the IRS may automatically correct the error and accept the return. If the taxpayer disagrees with the IRS’s adjustment, they have 60 days to request that the IRS reverse the change.
A taxpayer may request that an amount the IRS contends is due be removed from their account if the IRS assessed it after the period allowed by law or if the assessment was made in error or in violation of the law.
The Tax Tip states that if the IRS caused unreasonable errors or delays, a taxpayer may request that any interest related to the delay be removed from their account—although this relief is rarely granted.
Finally, the Tax Tip notes that if a taxpayer believes that they do not owe all or part of a tax debt, they may, in certain circumstances, submit an offer in compromise to the IRS using Form 656-L, asking the IRS to accept less than the full amount of the debt.
The Tax Tip contains links to more information about, inter alia, the Taxpayer Advocate Service, an independent organization within the IRS which helps taxpayers with problems they have been unable to resolve through normal IRS channels; payment plans and installment agreements; and appeal rights after an examination or audit.
Click here for IRS Tax Tip 2022-17.