Do you know what to do in case of an IRS refund error? We explain how to proceed, in case the error is yours or if the error is from the Tax Authorities.
When the most awaited time of the year arrived, he filled out and submitted his IRS declaration and, as the Government had promised, the Tax Authorities settled accounts with him a few days later. But imagine that, when you look back at the numbers, you realize that there was a IRS refund error. What to do?
Mistakes happen and can either result from a failure in the information that the taxpayer provided to the Tax Authority or can result from a typo in the accounts of the Ministry of Finance. In both cases, there are possible solutions – some more expensive than others – and it is always advisable to rectify the situation as soon as possible.
What to do in the face of an error in the IRS refund?
Even if you are afraid of being subject to a fine, there is no situation in which it does not pay to communicate everything correctly to the Treasury, because the penalty is always much greater when the error is detected by the Tax Authorities than when it is communicated by the taxpayer. So the rule of transparency always applies: if you see an error in your IRS refund, report it as soon as possible.
If the mistake was made by the taxpayer
It may happen that the error in the IRS reimbursement resulted from incorrect communication of your income or expenses, which influenced the tax authorities’ accounts and made you receive a different amount than you should have. In these cases, the solution is always to present a replacement statement that corrects the wrong information and helps the Tax Authority to redo the accounts.
The replacement IRS return can be submitted at any time, as long as we are within the deadline for submitting IRS returns (which ends at the end of June). If the deadline has already expired, you can replace your declaration within 30 days, even if you are subject to a fine. From this time interval, the fines increase.
To submit an IRS replacement declaration, you only have to go to the Finance Portal and, in the same area where you submitted your declaration, submit a replacement declaration.
If the error was made by the Tax Authority
It can also happen that the tax system is not perfect and it is wrong to do the math on your taxes. When this happens and there is an error in the IRS refund, the taxpayer can make a graceful complaint where he exposes the problem to the Ministry of Finance.
The graceful claim can be submitted online, on the Finance Portal, or at a Finance office. In the latter case, the complaint can either be submitted orally (resolution is faster, but you do not have physical evidence of what you declared) or in writing (resolution is slower, but you have proof of everything you declared).
The deadlines for submitting a graceful claim are quite long, but it is important to note that they do not exempt you from paying what you are required to pay – that is, if Finance sends you an invoice home, you have to pay it, even if then come to complain about her.
What happens if you don’t say anything?
Leaving an error on the IRS refund can get you into trouble with the Tax Authority, because the Tax Authority always assumes that the taxpayer knows what is in the declaration and validates everything.
By this logic, if there is an error in the IRS reimbursement and the taxpayer does not say anything, when Finance finds out, they will assume that the silence was deliberate and in bad faith – which does not play anything in their favor.
The rules dictate, then, that any error in the IRS refund communicated by the taxpayer gives rise to a smaller penalty than any error discovered by the Tax Authority – especially if this error has caused a change in the refund in favor of the taxpayer, that is, if , because of that failure, the taxpayer has received too much money.
It is best, therefore, not to ignore the receipt from the IRS, regardless of whether you have to pay or receive. Evaluate the accounts well, confirm everything in the statement and do not hesitate to notify the Tax Authority of any errors you find. It always pays much more to be honest than to try to pass unnoticed through all the filters in the tax system.
How to return to the State what it received in excess?
One last note for this article is related to how you can regularize your tax situation in the event of an IRS refund error.
If it detects that the Tax Authorities have paid you too much money and alert the Tax Authority to this fact, when your case is confirmed, the system will generate a debit note and a reference for the respective payment at the ATM. All you have to do is find it in your personal area of the Finance Portal, pay and keep the respective receipt as proof.
Just to make sure that everything is fine, it is still advisable to return to your personal area of the Finance Portal a few days later, to confirm that the debt has been declared settled and that you no longer have outstanding accounts with the Tax Authority.
Article originally published in July 2019. Last updated in April 2023.