Unless the taxpayer knew, or should reasonably know, that the IRS had made an error.
Yeah, I disagree with it but it’s somewhere in the tax court records, and it’s been there for over 30 years. It’s “kind of” like the bank saying your $15k deposit was for $150k. You can point out their error, to them, in writing, but regardless of their ignorance, you’re still on the hook for a certain period of time.
Well, I have a reasonable suspicion, but I can’t possibly “know.” The transcript shows lines for what appear to be computer-calculated values (the values are listed like this: “taxpayer abc $xyz.00”, “computer abc $0.00”), suggesting that the computer decided the value should be zero. The computer is never wrong 
.
As much as I would like to let a thread go by without a nitpick …
Is this evasion or avoidance
It doesn’t matter. IIRC, the IRS considers either to be equally abhorrent/illegal/lock-up-able. What you want is tax minimization. That’s legal, at least vocabulary-wise.
He will remain on the hook for the correct tax, of course. They arent going to fine him for underpaying when he in fact paid the correct amount on time but they took it upon themselves to adjust it and return a refund.
Just like that bank error in your favor - you need to repay that erroneous $150k deposit, but you arent going to get charged with theft for waiting patiently for the bank to fix their own error. The theft charge comes when you spend the money you know isnt yours, or otherwise refuse to return it. In fact, trying to give it back proactively often only creates more issues.
As long as scripta accepts the fact he isnt all-knowing 
, he has valid pretext to assume the IRS merely fixed a mistake he overlooked. If they ever decide their adjustment was a mistake, he will gladly (or maybe not so gladly) hand over the tax due.
Not gladly, because I will have returned half to my employee that I would not be able to get it back. This is another thing I was asking – if the IRS figured out that they (their computer) made a mistake, could I still be held liable for that mistake?
What do you mean, the phone call will cost you? Meaning they will straighten things out and you won’t get the refund, half of which you have to give back to your employee? That’s not costing you anything. You already paid them the money.
This is why it isn’t costing you anything making the call. If you don’t make the call and just do what they say, even though what they say is wrong, what is stopping them from fixing their mistake and coming after you for that money that you won’t be able to recover. The phone call is saving you from having to worry about this, not costing you money.
In a way it is, because the refund they calculated was credited to my tax account and I expect will soon appear in my bank account.
That’s my question – could they still come back after me after they made the mistake? I.e., my return is correct, they scanned it correctly, they said I miscalculated something and gave me a refund. Could they later say “sorry we made a mistake” and claw back what they refunded?
My default answer to anything regarding “could the IRS do xyz?” is always yes.
You could spend the next several years worrying, or you could call. Keep in mind there is a chance that when you call, the person will be able to explain why, in your particular situation, the IRS is right and H&R Block’s program was wrong. Then you won’t have to worry. I actually suspect this is the most likely scenario.
Your refund is very much a Schrodinger’s cat right now. If you call, you could be informing them they are wrong and lose your refund. But you’ll never have to worry. (Dead cat) Or you could find out you were wrong, get your refund, and never have to worry. (Alive cat) But if you don’t call, you’ll get your refund, some of which you will have to give away which you can never get back, and you will always have to worry that you will have to pay them back that money that you can’t recover. (Cat might be dead, but you wanted that money so bad you won’t ever know, unless he dies and the IRS notices - which they probably never will).
Honestly, the scenario where you point out the IRS’s mistake is the least likely outcome here. If you call, you’ll probably keep the refund. If you don’t call, you’ll probably keep the refund. It should all depend on how much it’s going to mess with you worrying they will come back to get the amount they gave you on accident.
This isn’t my advice, but if it were me I’d be leaning towards skipping this part.
I’ve thought about this, but I think that would be bad if someone ever found out (which I think is unlikely). If I withheld money from the paycheck for taxes, but then didn’t pay those taxes, I’d be stealing from the employee.
Thus why it isnt advice. But as you initially pointed out, the employee is likely going to pay the tax one way or another. And it’s not like you withheld the money and kept it, you have records of withholding then paying it (then the IRS later sent it back). I’d think, if it ever came up, you could make it into enough of a gray area to justify ignorance as a defense.
I also know it’s easy to claim to know what I’d do, when I’m sitting in the peanut gallery blissfully uninvolved. If it were me I’d probably be giving far more weight to the risks you mention, like you are.
Thank you, Commissioner @glitch99 . 
While he will probably not be liable for fines and interest, how can you make a blanket statement about what the IRS will do? They will do what they want, and let the victim argue, possibly all the way to tax court if he doesn’t find a reasonable ear before then.
Of course they will try to do whatever they do. Again with the preface that it’s easy to talk from the peanut gallery, I’d welcome them to try to apply late penalties for a payment I made and they sent back stating it wasnt needed. If they try to push that case the absurdity will cause nonstop media and legislative attention (and perhaps a gofundme that’ll more than pay the legal defense costs) that will stop them dead in their tracks one way or another.
While I understand your peanut gallery position, have you ever had an interaction with the IRS that stopped them dead in their tracks? Have you ever personally (intimate knowledge) known of someone stopping the IRS dead in their tracks?
To be fair, they appear to be stopped in their normal course of activity, but that’s not what I’m talking about.
ETA: Hey, they may have become less arrogant and more “understanding”, but I figure that to be as likely as Socialists becoming more freedom loving.
I know of people who have won against the IRS. While in many cases “winning” can still be a loss, this particular case would be a rather entertaining ride getting to that point.
It may be entertaining for you to watch or read, but it’s not going to be all that entertaining for me to have to deal with them.
Speaking of which, I’ve been trying to call for 2 days and keep getting the “we’re too busy, try calling again next business day” message.
I was in the same boat. I wasn’t able to get through to anyone until I called first thing in the morning. It may even have been a Monday morning.
I had noted having that issue for months straight. Then I stopped using the generic series of prompts to get a live person, and instead listened to the menus and entered my tax ID when prompted, and finally got connected to someone. I dont know if it was a coincidence or not.
And while that not common, it’s also not rare. However, it didn’t answer my question.
This leads me to believe you’ve never been “probed” by the infernal revenue service, or that you are a glutton for punishment, or that you have way too much time on your hands … or all three.
I’m just saying that if they tried to make that argument in front of a judge, it’d likely result in a recess being called while the judge composes himself after bursting into a fit of laughter. It might even make it into the late night monologues.
“We are prosecuting Mr Scripta for tax fraud because while he reported the correct numbers, we took it upon ourselves to incorrectly adjust his tax return and sent him a refund he never requested.” The only people who wouldnt find that hilariously insane are the same people who try to claim you should never use a self checkout because it’s just a tool the store uses to falsely arrest you for theft.