What to Do When the IRS Makes a Mistake

Question: I paid the balance due in full of a 2011 business tax debt in May 2013, but the Internal Revenue Service mislabeled the money and used it to offset another debt my company had incurred. The IRS says I still owe, but I don’t understand how or why I’m responsible for repaying them money they lost, due to mistakes within their own system. What to do? Answer: Your question is a timely one, given that the IRS announced last week that it is issuing a Taxpayer Bill of Rights, which it will post in its offices and mail out with tax notices. More...