Tuesday, November 9, 2010


I recently reported on new legislation requiring that government notices and correspondence be written in “plain English” that is “easily understandable”. This includes IRS notices.

One of my few remaining corporate clients recently received a CP134B notice from the IRS identified as “FTD/Estimated Payments Discrepancy Notice – Balance Due”. Let us see if this notice is written in “plain English” and is “easily understandable”.

The notice began with a heading “Why We Are Writing You” which explained –

We found that the amount credited to your account as Total Federal Tax Deposits differs from the amount reported on your tax return for the above tax period. You now have an outstanding balance on your account of $123.45

The notice went on to identify “Payments or Credits Applied” and provide a “Calculation of Balance Due”.

So far this seems “easily understandable”. The notice clearly, and in “plain English”, explains its purpose and the calculation formula is also easy to follow.

However there was a very serious problem with the notice. A notice can be crystal clear in its wording and structure – but what if it’s actual content makes absolutely no sense?

The statement quoted above to describe “Why We Are Writing You”, in the context of the tax return to which it referred, is a total lie.

The “Payments or Credits Applied” listed the correct date and amount of the payment made by the taxpayer.

The “Calculation of Balance Due” showed the correct amount of “Total Tax Due on Return”. It next correctly identified the “Total Estimated Tax Payments” as “0”. The third line in this section also correctly identified “Other Payments and Credits” as the amount previously identified under “Payments or Credits Applied”. This payment amount was exactly the same as the amount identified as “Total Tax Due on Return”.

The calculation went on to again correctly identify the “Unpaid” amount as “0”. The total amount due on the return was paid in full.

The next line is identified as “Penalty on unpaid balance” and shows the $123.45 that was mentioned in the earlier explanation. Even if the penalty on the unpaid balance was 100%, 100% of “0”, the amount identified as “Unpaid”, is “0”. How can a penalty on a “0” balance due be $123.45?

This notice makes absolutely no sense. In going back to “Why We Are Writing You” – the amount credited to the taxpayer’s account as "Total Federal Tax Deposits", correctly identified on the notice, is exactly the same as the amount reported on the return!

So now IRS notices report total nonsense in “plain English”! Is this progress?


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