21.5.4. General Math Error Procedures

(1) Employees in the Accounts Management (AM) organization respond to taxpayer inquiries and phone calls, as well as process inquiries and other internal adjustment requests related to math errors.

(1) Authority for these procedures is found in the following sections of the Internal Revenue Code (IRC) and their corresponding Treasury regulations.

• IRC 6201(a)

• IRC 6213(b)

• IRC 6213(g)(2)

• IRC 6402(a)

• IRC 6511

• Protecting Americans from Tax Hikes Act (PATH Act) enacted December 18, 2015

• The Disaster Tax Relief and Airport and Airway Extension Act of 2017, enacted on September 29, 2017

• The Tax Cuts and Jobs Act (TCJA) enacted on December 22, 2017

• The Bipartisan Budget Act of 2018 enacted on February 9, 2018

• The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020

• The Consolidated Appropriations Act, 2021, enacted on December 27, 2020

• The American Rescue Plan Act of 2021 enacted on March 11, 2021

(1) The Director of Accounts Management is responsible for monitoring operational performance for all the Accounts Management campuses.

(2) The Operations Manager is responsible for monitoring operational performance.

(3) The Team Managers and Leads are responsible for ensuring employees have the tools to perform their duties.

(4) Employees are responsible for following the instructions contained in this IRM and maintaining updated IRM procedures.

(1) Program Reports: The program reports provided in this IRM are for identification purposes for the Accounts Management Contact Representatives (CRs) and Tax Examiners. For reports concerning quality, inventory, and aged listings, refer to IRM 1.4.16, Accounts Management Guide for Managers. The overage report can be viewed by accessing Control Data Analysis, Project PCD, and are on the Control-D/Web Access server, which has a login program control.

(2) Program Effectiveness: Program effectiveness is determined by Accounts Management’s employees successfully using IRM guidance to perform necessary account actions and duties. The following are used to ensure program effectiveness:

• National Quality Review System (NQRS)

• Centralized Evaluative Review (CER)

• Managerial Reviews

(3) Annual Review: Review the processes included in this manual annually to ensure accuracy and promote consistent tax administration. This may be included under responsibilities for a manager.

(1) Federal Managers Financial Integrity Act (FMFIA) of 1982 requires federal agency executives periodically review and annually report on the agency’s internal control systems.

(2) The Government Accountability Office (GAO) sets forth the standards for an effective Internal Control in the Federal Government.

(3) Systemic controls are embedded in the xMend Integrated Automation Technologies (IAT) tool and the Integrated Data Retrieval System (IDRS).

(1) For a comprehensive listing of acronyms, refer to the Acronym Database. The acronyms below are some of the acronyms found in this IRM.

(1) Refer to IRM 1.4.16.1.6, Related Resources, for information on related resources that impact internal controls.

(2) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see Taxpayer Bill of Rights.

(1) The following are not considered mathematical/clerical errors for purposes of the 60–day abatement request and a math error (- G freeze) should not be set:

1. A correction to withholding or estimated tax payments.

2. Any tax decrease or increase of credits resulting in a larger refund than the taxpayer expected.

Note: This includes situations where too much tax was assessed or too little credit was allowed due to an IRS processing error. For circumstances where too little tax was assessed or too much credit was allowed as a result of an IRS processing error, see IRM 21.4.5.5, Erroneous Refund Categories and Procedures.

(1) The following sections provide research and general procedures for math errors. For more specific processing procedures, refer to IRM 21.5.4.4, Math Error Procedures Processing.

(2) Research IDRS to identify math error codes input on a taxpayer’s account during original return processing. There are several IDRS Command Codes that display math error notice codes: CCs RTVUE, BRTVU, TXMOD, TRDBV/BRTVU and IMFOLR/BMFOLR. For a description of IMF/BMF math error notice codes refer to Document 6209, Notices and Notice Codes.

1. CC RTVUE/BRTVU is used most often to analyze, respond to, and resolve math errors. This CC displays up to five math error notice codes. CC RTVUE/BRTVU also shows the taxpayer’s figures as they were originally reported and the figures as corrected by the computer. If the taxpayer has their return, employees can go over line-by-line entries, if necessary.

2. CC TXMODA displays the primary math error notice code in the Posted Return Information Section next to the literal “MTH-ERR”. If multiple math errors are present, the literal “MULT MATH ERRORS” does appear after the primary math error notice code.

3. CC IMFOLR displays up to five math error codes. CC IMFOLR places dashes between the math error codes making the three-digit code easier to read.

4. CC TRDBV displays math error codes under the “FORM-TYPE” screen “CODES”. The “CODES” screen contains a multitude of codes used in processing the return. Under code type, look for NOTICE CODE to identify math error notice codes.

Note: Refer to IDRS Command Codes Job Aid for a detailed description of each command code above.

(1) When a taxpayer requests an abatement with or without substantiation within 60 days, the IRS must abate the assessment. For abatement requests without substantiation, after abating the assessment treat the response as a protest and refer the case to Exam Classification. Exam Classification makes a determination, and if the taxpayer disagrees, the taxpayer has the opportunity to appeal the determination prior to the issuance of a notice of deficiency. If a notice of deficiency is issued, the taxpayer has the opportunity to file a petition with the United States Tax Court.

(2) An abatement request may be written or oral.

(3) Do not recompute Estimated Tax (ES) penalties because the ES penalty computation is based on the original tax shown on the present or preceding year tax return.

(4) Taxpayers may file amended returns and not address the math error issue:

(5) Determine whether the original return is required. When requesting the original return from files in response to a math error protest, include the following remarks, "Request for Math Error Protest Case" on Form 2275.

(6) Whenever a math error is identified and there are 90 or less days left to the assessment statute expiration date (ASED), contact the Statute function.

(1) If the taxpayer disagrees with the math error notice, determine under which category to process the protest. The two types of math error categories are:

• Substantiated Protest

• Unsubstantiated Protest

(2) Substantiated Protest occurs when a taxpayer provides supporting documentation either orally or in writing, which proves the IRS's math error calculation incorrect. Refer to IRM 21.5.4.4.4, Math Error Substantiated Protest Processing.

(3) Unsubstantiated Protest occurs when a taxpayer fails to provide supporting documentation either orally or in writing to prove the IRS's math error calculation is incorrect. Refer to IRM 21.5.4.4.5, Math Error Unsubstantiated Protest Processing.

(1) If, while processing an amended/duplicate return or a taxpayer’s response to a Letter 12C, Individual Return Incomplete for Processing, (IMF notice) or certain BMF notices, a math error is detected, follow the procedures below to set the initial math error on the module:

1. Recompute the tax and/or credits.
   

2. Adjust the tax and/or credits to the corrected amounts.

3. Input the adjustment using blocking series (BS) 77/78.

   Note: If the original return was filed electronically, use BS 77 with a copy of the CC TRPRT, MeFile, or CC IMFOLR print attached. Do not use BS 78 unless the original return was filed as paper.

4. Use source code (SC) 6, the appropriate hold code (HC), and the reason code(s) (RC) that best describe the adjustment for IMF accounts. Source codes and reason codes are not used in BMF adjustments. Refer to IRM 21.6.7-1, Reason Codes.

5. Send the taxpayer Letter 474C, Math Error Explained (IMF), Letter 3024C, Math Error Explained (BMF), or other letter that better describes the situation giving the taxpayer a detailed explanation of the math error. When an explanation is too lengthy or complicated to explain, include an exhibit illustrating the taxpayer's error.

   Example: A copy of the return showing the taxpayer's figures and corrected figures, worksheets, schedules, tax tables, etc.

6. Identify the math error and document the account in the appropriate system to explain the error(s).

   Note: BS 77/78 generates the "-G" freeze deferred action for 12 cycles on Master File (MF) and the appeal rights indicator.

(1) When you identify a math error and examination criteria (see Exhibit 21.5.3-1, Claim Processing with Examination Involvement) are present:

1. Set the initial math error condition by inputting an adjustment per IRM 21.5.4.4.1, Setting the Initial Math Error Action.

2. Input a second Transaction Code (TC) 290 for zero amount using BS 74 and Posting Delay Code (PDC) 1.

   Note: Adjust penalties and interest if needed. Route and send Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, (if required) per IRM 21.5.3-1, Claim Processing with Examination Involvement.

(2) When the taxpayer agrees with the math error notice in writing, research Integrated Data Retrieval System (IDRS) and route the correspondence to the Examination Function shown on CC AMDISA for association with the case, refer to IRM 21.5.10-2, AIMS STATUS CODE GUIDE - CAMPUS CASES, for guidelines. For Correspondence Imaging Inventory (CII) cases, refer to IRM 21.5.1.5.2, Cases Currently Assigned in CII.

(1) Correction of a math error on an original filed return is not an amended return or claim for which the amended claims date is required. Do not use an amended claims date when correcting a math error posted with the original return.

(2) If written substantiation is necessary to reverse the math error, the taxpayer may be able to fax the information. You must determine if the documentation can be faxed while you are on the telephone. If the taxpayer can fax, provide them with your fax number. Refer to IRM 21.5.2.4.3, Adjustments Requiring An Amended Return or Taxpayer Documentation, for additional information on accepting faxed documentation. If the taxpayer cannot fax immediately, advise them to call back when they are able to fax or, if unable to fax, they may submit the request and supporting documentation to the address on the notice. If the taxpayer states they misplaced their notice and requests the address to submit documentation to, provide the taxpayer with the mailing address for their processing center. Refer to Where to File Individual Tax Returns.

(3) If a taxpayer is responding to a math error and claiming an additional change to the original return, two separate adjustments are necessary regardless of whether the 45–day interest free period is met. One adjustment is made without the amended claims date (for the math error issue) and one with the amended claims date, if applicable (for the non-math error issue). See IRM 21.5.3.4, General Claims Procedures, or IRM 3.11.6.4.5.3, Amended Claims Date, for more information. Use a HC 4 on the first adjustment and the appropriate PDC on the second adjustment to ensure the first adjustment posts first. Refer to IRM 21.5.2.4.17, Posting Delay Code (PDC), for more information.

(4) When a reply is received after 60 days (refer to IRM 21.5.4.3, General Math Error Procedures Overview) from the notice date and there is no –G freeze on the module:

(5) Resolve math error inquiries received within the 60-day period as follows:

(6) Take the following actions when the taxpayer agrees with the math error:

(1) A Substantiated Protest occurs when the taxpayer provides supporting information to indicate the math error condition is not correct. For a Substantiated Protest:

Note: For math errors on Business Master File (BMF), a specific notice is sent to the taxpayer based on which form the error was found in (e.g., not all inclusive, CP 101 Math Error, Balance Due of $5 or More on Form 940, CP 102 Math error, Balance Due on Forms 941, 941SS, 943, 944, 944SS, 945, CP 103 Math error on Form CT-1, etc.). Research IDRS (e.g., CC BRTVU) to determine what the specific math error was and to find the specific notice sent, to determine how to correct the math error.

Exception: Follow procedures for FATCA Claims in IRM 21.8.1.12.14, 180 - Day Interest Free Period for Chapter Three and Chapter Four Withholding, or IRM 21.8.2.12.2, Form 1042, when processing responses to Form 1042-S ME Codes 430, 432, 433, 435, and 441.

Note: Use IAT xMend Tool or another appropriate IAT tool with adjustment capabilities to work substantiated math error claims. Refer to IRM 21.2.2-2, Accounts Management Mandated IAT Tools.

1. Oral statement adjustments are limited to the amount shown on the original return. Do not reduce tax below the amount reported on the original return or allow credit more than the amount claimed on the original return without a written statement from the taxpayer.

   Exception: The table below lists three exceptions to the oral statement adjustment limitation in (a) above.

If	Then
There is no change to the income reported on the original return, and Math verification was by-passed in original processing. The computer stops verifying the taxpayer's information at the point of error and computes the return based on the new figures. Math verify the return. If the tax per the return is wrong, change the tax to agree with the corrected figure, and Example: The taxpayer does not supply valid TINs for the dependents, math verification stops at the point of error. If the taxpayer provides the correct TINs and the computed tax on the return is wrong due to an addition error on the taxable income, change the tax to agree with the corrected taxable income since tax is a computational item. Note: The same is true for any of the income based credits such as EITC. Verify if other math errors would have been issued that affected the amount of total tax, and the correction of these errors would have resulted in a reduction of total tax originally reported.	Make an appropriate adjustment to agree with the corrections Advise the taxpayer of the adjustment. If the taxpayer is expecting a refund and received only a portion of the refund as a direct deposit, the second refund will direct deposit. Refer to IRM 21.5.6.4.35.4, Refund Holds. For a mailed check advise the refund should be received in 4–6 weeks. Note: Direct deposits are allowed on current and prior tax years. See IRM 21.4.1.5.7, Direct Deposits - General Information, and IRM 21.4.1.5.7.1, Direct Deposit of Refunds, for additional guidance.
There is no change to the income reported on the original return, and Math verification of the return indicates that an incorrect amount of tax from the tax tables was claimed on the return.	Make an appropriate adjustment to the tax to agree with the corrections. Advise the taxpayer of the adjustment. If the taxpayer is expecting a refund and received only a portion of the refund as a direct deposit, the second refund will direct deposit. Refer to IRM 21.5.6.4.35.4, Refund Holds. For a mailed check advise the refund should be received in 4–6 weeks. Note: Direct deposits are allowed on current and prior tax years. See IRM 21.4.1.5.7, Direct Deposits - General Information, for additional guidance.
There is no change to the income reported on the original return, and Math verification of the return indicates that an incorrect amount of credit was claimed for Recovery Rebate Credit, (RRC) on the tax return. This includes if no amount was claimed at all.	Make an appropriate adjustment to the credit to agree with the corrections. Advise the taxpayer of the adjustment. If the taxpayer is expecting a refund and received only a portion of the refund as a direct deposit, the second refund will direct deposit. Refer to IRM 21.5.6.4.35.4, Refund Holds. For a mailed check advise the refund should be received in 4–6 weeks. Note: Direct deposits are allowed on current and prior tax years. See IRM 21.4.1.5.7, Direct Deposits - General Information, for additional guidance. Refer to IRM 21.6.3.4.2.14.1, Recovery Rebate credit - Adjusting the Credit, for more information.

2. Do not ask the taxpayer to provide written documentation except for: missing tax forms or schedules, age verification for Child Tax Credit and/or EITC. (See IRM 21.6.3.4, Credits Procedures, or when the taxpayer is responding to a denial of exemption, Child and Dependent Care Credit, Child Tax Credit, and EITC due to a discrepancy with the date of death posted on CC INOLES.) Refer to IRM 21.5.2.4.3 (5), Adjustments Requiring An Amended Return or Taxpayer Documentation, for information on requesting documentation by fax.

3. Validate the substantiation by verifying account information needed to allow adjustment. This may include reviewing several command codes such as CC INOLES for Taxpayer Identification Number (TIN) verification or CC RTVUE/IMFOL or CC BRTVU/BMFOL to determine if the adjustment is appropriate.

   Example: If the dependent’s TIN was invalid and Child Tax Credit was disallowed, after verifying the validity of the TIN, check the Date of Birth to ensure the child qualifies for the credit.

4. If there is a -R freeze initiated by Return Integrity and Compliance Service (RICS) and/or Return Integrity Verification Operation (RIVO), no - A freeze is present on IDRS, and an adjustment is needed, input the adjustment using a hold code 1. For more information regarding RICS/RIVO involvement see IRM 21.5.6.4.35.3, -R freeze Overview for Accounts With Return Integrity and Verification Operations (RIVO) Involvement.

5. While math error cases (with exception of ME 653) are not sent as a CAT-A referral, it is still appropriate to review for CAT-A criteria. This means the CAT-A criteria is used as a guideline to determine whether a math error is worked as a substantiated or unsubstantiated math error case. If the case meets CAT-A criteria, treat it as an unsubstantiated math error case. Refer to IRM 21.5.4.4.5, Math Error Unsubstantiated Protest Processing. To determine if the case meets CAT-A criteria, refer to the following IRMs:
   IRM 21.5.3-2, Examination Criteria (CAT-A) - General,
   IRM 21.5.3-3, Examination Criteria (CAT-A) - Credits,
   IRM 21.8.1.2.10, Examination Criteria Cat-A International, for International claims,
   IRM 21.8.2.2.12, Examination Criteria, for BMF cases.

6. Refer to IRM 21.6.3.4.2.7.13.1, EITC Math Error Reply, for specific EITC math error information.

7. Refer to Exhibit 21.5.4-1, Actions on Math Error Cases, for general procedures on math error cases.

8. If the account adjustment changes, adds or deletes a TIN, refer to IRM 21.6.1.7, Command Code DUPED and DDBCK, for instructions.

9. Refer to IRM 3.14.1.6.1.1.2, Social Security Numbers (SSNs), for correction of entity issues involving invalid TINs.

10. Refer to IRM 3.21.263.8.7, Math Errors, for procedures on math errors involving individual taxpayer identification numbers (ITINs).

(2) If an open TC 420 (and no TC 576 or TC 570) is present on the module, regardless of the AIMS Status, and the taxpayer submits supporting information to correct the math error condition:

(3) When an open TC 420 and the account contains a TC 576 or TC 570, and the taxpayer files supporting information to correct the math error condition:

1. Input TC 470 closing code (cc) 94.

2. Input TC 29X.

3. Input any appropriate CRNs.

4. Use BS 70.

5. Use the SC and RC(s) that best describe the adjustment.

6. Use HC 3.

7. Use PC 7.

8. Input a PDC for 1 cycle.

9. Send the taxpayer Letter 474C, or other letter that better describes the situation, explaining the action taken and, if there is a credit balance, why refund is being held.

Reminder: If the −G freeze has fallen off, reset the math error. See IRM 21.5.4.4.5(3), Math Error Unsubstantiated Protest Processing.

(1) An Unsubstantiated Protest occurs when a taxpayer does not provide supporting documentation to correct the math error condition. If, after explanation, the taxpayer does not agree with assessment, explain the taxpayer's abatement rights, and the consequences of abatement (the case may be referred to Examination and the refund may be held). Ask whether the taxpayer wishes to request abatement. An abatement request may be written or oral. The taxpayer is entitled to abatement even if they do not substantiate. After abatement, any assessment must be made pursuant to deficiency procedures, as below in para (4) and (5).

(2) If the amount claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, (refer to IRM 21.5.1.4.12, Tolerances) do not follow the procedures shown below. Adjust the account. See IRM 21.6.3.4.2.14.2, RRC Taxpayer Notice Codes (TPNC), prior to addressing the Recovery Rebate Credit math error.

(3) If the taxpayer requests abatement, the following actions below are required. Process steps below in order to input unsubstantiated math error protest for Exam to process:

1. Input TC 290 .00 using blocking series (BS) 77 (with original return) or BS 78 (without original return). If the original return was filed electronically, use BS 77 with a CC TRPRT or CC IMFOLR print attached. Do not use BS 78.

2. Use source code (SC) 6, hold code (HC) 3 and the reason code(s) (RC) that best describe the adjustment.

(4) Follow the steps below to input the abatement the taxpayer requested. If you reset the -G freeze, a PDC of 1 is required on this adjustment.

Note: Proper use of posting delays is necessary to avoid unpostables.

1. Input TC 470 cc 94. Failure to input results in an unpostable.

2. Input the abatement with TC 29X and any appropriate refundable credit(s).

Caution: The credit(s) must be on the account before Exam can begin the audit.

3. Use BS 74.

4. Input the SC and the RC that best describe the adjustment.

5. Use HC 3.

6. Use PC 7.

7. Input a posting delay code for 1 cycle.

   Caution: Failure to input the correct posting delay on the TC29X causes the adjustment to unpost (Unpostable 154). The posting sequence for all Master Files is generally from the lowest numbered TC to the highest numbered TC. Refer to IRM 3.12.279.17.4, Cycling Transactions. The TC 29X with a CC REQ54 posts before the input of the TC 470 using REQ77 unless a posting delay is input.

8. Adjust penalties and interest as appropriate.

9. Send the taxpayer Letter 474C, Math Error Explained (IMF), or Letter 3024C, Math Error Explained (BMF), or other letter that better describes the situation, explaining the action taken and, if there is a credit balance, why the refund is being held.

(5) When the protest is unsubstantiated and the module is open on AIMS, process as follows:

1. Input TC 470 cc 94. Failure to input a posting delay code results in an unpostable.

2. Input TC 29X and any appropriate refundable credit(s).

Caution: The credit(s) must be on the account before Exam can begin the audit.

3. Use BS 74.

4. Input the SC and the RC that best describe the adjustment.

5. Use HC 3.

6. Use PC 7.

7. Input a posting delay code for 2 cycles.

   Caution: Failure to input the posting delay on the TC 29X causes the adjustment to unpost (Unpostable 154). The posting sequence for all Master Files is generally from the lowest numbered TC to the highest numbered TC. Refer to IRM 3.12.279.17.4, Cycling Transactions. The TC 29X with a CC REQ54 posts before the input of the TC 470 using REQ77 unless a posting delay is input.

(6) If the abatement is on an Exempt Organization (EO) return, contact the EO Examination Classification Site. Refer to IRM 21.7.7.6.16, EO Claim Procedures, for the address. Inform them that a math error abatement requiring reassessment has been made. Give them the taxpayer's name, form number, master file tax (MFT), tax period, name control, employer identification number (EIN), and the amount. Classification sites input TC 424 to secure these returns.

(1) Multiple Math Error Responses could include agreements and protests.

(1) Refer math error inquiries where the taxpayer filed an original return with Form 8379, Injured Spouse Allocation, (TC 150, BS 92), as follows: