Beware of IRS mistakes this tax season

By Matt Porter

January 16, 2014 Updated Jan 16, 2014 at 7:25 PM EDT

Apalachin, NY (WBNG Binghamton) When the Internal Revenue Service in 2010 issued an extra $1,000 in Jeremy Lundmark's tax refund, he paused.

"The deposit came in at $1,148 more than what we put in for," Lundmark said.

The mistake would just be the first of several from the IRS as it tried to sort out exactly how much Lundmark owed in taxes.

A month later, the IRS asked for the money back.

He paid it, but the IRS continued billing him.

"At that point, I called in and found out they had lost my payment," Lundmark said. "It was gone."

The IRS credited the wrong account.

Another mistake made as Lundmark learned the IRS isn't infallible.

"When I get these bills, I feel I must have messed something up, and I have to pay this bill," he said.

Tax advisor Wendy Loomis said many people often don't question an IRS correction, something that could cost them hundreds or even thousands of dollars.

"Most people say, 'Oh I don't want to get involved, I'll just pay. Wrong,'" she said.

Loomis said her agency has successfully corrected the IRS with its returns about 30 percent of the time.

She said the statute of limitations on corrections is three years.

"It's not unusual to have these letters be several years after you filed the return," Loomis said.

Loomis said if you are going to file your taxes online, she said it's critical to print out a copy of your tax return before you file it with the IRS.

She advised people with corrections to seek professional help, and to do that, preparers need a copy of the original return.

Two years later, New York came looking for money from Lundmark based on the IRS' initial mistake.

Loomis said taxpayers have 90 days after a resolution to inform the state of any corrections.

Lundmark didn't know he had to alert the state.

"I had no idea I had the responsibility," he said.

Lundmark said his confidence in the IRS is not the same after his experience.

"I'm very skeptical now, when I get a bill," Lundmark said. "When I am getting ready to file my taxes now, I'm a little concerned what the game is going to be this year."

Lundmark was able to quickly resolve all the problems because he documented each step including sending his payment through certified mail.

Tax preparers say documenting everything is the best protection against mistakes, including those made by the IRS.