In a bipartisan effort led by Senators Elizabeth Warren (D-Mass.) and Bill Cassidy (R-La.), along with Representatives Randy Feenstra (R-Iowa) and Brad Schneider (D-Ill.), a new bill aims to revolutionize the way the IRS handles tax return errors. The proposed legislation, dubbed the IRS Math and Taxpayer Help Act of 2024, demands greater transparency from the IRS in addressing and rectifying simple accounting mistakes on taxpayers’ returns.

Under the current system, the IRS can correct mathematical errors on behalf of taxpayers, providing only a general notice of adjustment and a 60-day window for response. However, the new bill seeks to mandate detailed explanations from the IRS, including the specific error identified and a computation of the correct amount owed.

The necessity for such reform became apparent during the 2022 filing season, with the IRS issuing over 9.4 million math error notices, a majority of which related to pandemic-related recovery rebate credits and the child tax credit. Notably, 24% of these notices were linked to the child tax credit alone.

One of the key provisions of the proposed law is the elimination of reporting multiple alternative errors, compelling the IRS to provide clear descriptions of the underlying adjustment. Additionally, the bill includes a pilot program to evaluate the effectiveness of sending math error notices via registered mail, which requires a recipient’s signature upon delivery.

The initiative aligns with recommendations from the National Taxpayer Advocate (NTA), which emphasized the importance of precise explanations in math error notices. According to NTA Erin Collins, taxpayers must understand the consequences of inaction, as failure to respond within the designated timeframe forfeits their opportunity for review by the U.S. Tax Court.

While the IRS is already undergoing a significant operational overhaul and technological upgrade, spurred by the 2022 Inflation Reduction Act (IRA), the new legislation complements these efforts by demanding clearer communication with taxpayers. The agency’s strategic operating plan highlights the identification of issues such as math errors as a key project.

With the bill’s introduction, taxpayers can anticipate greater clarity and transparency in IRS communications regarding tax return errors, potentially streamlining the resolution process and enhancing taxpayer confidence in the system.