Since 2000 the IRS has tripled the number of correspondence audits. In her 2009 annual report National Taxpayer Advocate Nina E. Olson pegged them as one of the most serious problems facing taxpayers. Now, with the IRS widening its use of "math error" notices, too.
While they may sound innocuous, the math notices are sometimes more vexing than the correspondence audits. In a correspondence audit, the IRS zeroes in on an issue or two that stand out on a 1040--say, big deductions for charity or unreimbursed employee business expenses--and sends a letter asking the taxpayer to produce documents supporting those deductions within 30 days. According to the Treasury's auditors, mail-handling problems at the IRS sometimes mean taxpayer responses don't get to the right person in time.