Is the IRS ever WRONG???

There is a common perception that the IRS is an all-knowing, all-seeing, perfect entity. When a notice is received with a balance due, often the reaction is to accept it and pay it because, well, it must be right, right?

Wrong.  Many times the IRS notices are WRONG.  I know, it’s shocking.  How can the IRS be wrong???  Well, any IRS agent will be happy to inform you that we live in a voluntary tax compliance system, meaning that while everyone is required to file a tax return, it is up to those filing to voluntarily disclose their taxable income and calculate the tax due on it.  The IRS then compares that information to information reported to them by third parties to verify if it is a complete tax return.  If there is a significant difference between what the Taxpayer reported and IRS records, then the IRS printer just spits out a notice with the estimated tax due to have the Taxpayer address it.  Many folks receive these notices and then just make payment arrangements without any further question.

These notices are designed to estimate the maximum amount of tax concerning the issue and are not designed to estimate any credits the Taxpayer may qualify for.  Under the voluntary tax compliance system, it is up to the TAXPAYER to identify credits or tax rules that may reduce the Taxpayer’s tax liability (say that 10 times fast).

What should you do if your receive a tax notice?  First, ask the question: Is this notice right?  Even if the missing items listed on the notice are correct, is the tax calculated correct?  Are there any associated credits or deductions?

As always, I am here to help you if you are unsure of the answers to any of these questions. Check out my video on this topic here https://www.youtube.com/watch?v=2A_KAnH9DDQ