The Internal Revenue Service (IRS) is looking to increase its efficiency when it comes to tax audits. One way the agency is considering using to help achieve this goal is the use of machine learning. The agency has stated machine learning can help find patterns that could indicate a taxpayer’s failure to comply with tax law. The algorithm used by the machine would help flag these patterns and send the information to an IRS agent for review.
The tactic could help the agency address its massive backlog of paper returns and correspondences. To make matters even worse, correspondences sent by the agency are not always accurate. Use of an agent to review could help reduce this issue. However, taxpayers recently reported they received inaccurate notices from the IRS claiming they still owe taxes.
Taxpayers who find themselves in this situation can take control with the following guidance.
Step 1: Review the notice
The first step is to review the notice carefully. It is possible the IRS made a mistake. The federal agency recently sent out millions of CP14 Notices, many of which were sent in error. Taxpayers are reporting that in some instances the notices state the taxpayer owes taxes that they already paid. This is possibly a result of a failure on the agency’s part to process the payment and properly update the system, leading the system to falsely kick off the automated CP14 Notice.
Although the notice may contain a mistake, there could still be underlaying tax issues. It is possible that other information within the notice, such as back taxes or unpaid payroll taxes for business owners, may be accurate. As such, it is important to carefully review the notice to make sure you address any potential issues.
Step 2: Gather evidence
If you did pay the tax bill in question gather evidence to support this claim. This can include a bank statement showing the IRS pulled the funds from your account. If you choose to respond, do so using certified mail so you can track the correspondence. It is a good idea to reach out to a tax professional if you get a second notice.
Step 3: Continued action
There are options if you disagree with the IRS. You can fight back. The attorneys at Goldburd McCone are familiar with the workings of the IRS and can help you develop a strategy to fight back if the IRS is making unfair or inaccurate demands.