More transparency in the relationship between taxpayers and the IRS
In a move considered historic for tax transparency in the United States, President Donald Trump has signed the IRS Math and Taxpayer Help Act (H.R. 998), legislation that strengthens taxpayer rights and establishes new communication standards between the Internal Revenue Service (IRS) and individuals or businesses subject to “math error” reviews.
The new law requires the IRS to clearly, thoroughly, and verifiably explain any adjustment made to a tax return due to alleged mathematical or clerical errors. For foreign companies — including Brazilian businesses operating in the U.S. — this change has direct implications for how they manage tax risk, respond to IRS notices, and conduct tax compliance processes.
1. What Is the IRS Math and Taxpayer Help Act (H.R. 998)?
The legislation, unanimously approved by the Ways and Means Committee, the House of Representatives, and the U.S. Senate, was introduced by Representatives Randy Feenstra (R-Iowa) and Brad Schneider (D-Illinois).
Its primary goal is to ensure fairer and more transparent treatment of taxpayers when the IRS identifies an alleged mathematical error in an income tax return.
Key points of the law:
- The IRS must show all calculations used to correct the return.
- The agency must provide a clear, understandable explanation of what the alleged error was and why the amount owed or refunded was changed.
- The taxpayer must be informed of their right to dispute the adjustment within a 60-day period.
This legislative update aims to reduce uncertainty, legal ambiguity, and the opacity that has historically accompanied “math error” notices.
2. Why Was This Change Necessary?
According to the Ways and Means Committee, taxpayers were often surprised by IRS notices with little to no explanation about:
- why their return had been adjusted,
- how the amounts were recalculated,
- what steps they needed to take to correct or challenge the adjustment.
For individuals, families, and businesses — particularly those with more complex corporate structures or international operations — this created confusion, uncertainty, and challenges to maintaining full compliance.
By signing the bill, President Trump reinforced a commitment to making public service “more efficient and more accountable to taxpayers.”
3. What Changes in Practice for Foreign Companies in the United States?
For Brazilian businesses with subsidiaries, LLCs, C-Corps, or hybrid structures in the U.S., the new law brings meaningful benefits:
3.1. More Transparency in Audit and Review Processes
IRS notices must now include:
- detailed calculations of the alleged error,
- a clear explanation for the adjustment,
- a comparison between reported and corrected amounts.
3.2. Greater Predictability for Tax Planning
With more complete data, companies can more easily:
- identify where inconsistencies occurred,
- adjust internal accounting and compliance processes,
- communicate with headquarters in Brazil accurately and quickly.
3.3. Improved Tax Risk Management
Documented, transparent corrections reduce exposure to:
- improper assessments,
- missed deadlines,
- incorrect payments,
- negative impacts on cash flow.
4. Expanded Rights: Taxpayers Can Now Dispute Notices More Confidently
The 60-day window for contesting an adjustment remains, but taxpayers will now have access to sufficient information to present a well-supported challenge — either directly or through tax advisors.
This update is especially important for foreign businesses, which often face:
- differences between U.S. and Brazilian accounting standards,
- multiple layers of tax reporting,
- technical translation and interpretation challenges.
The new law streamlines communication between companies and the IRS, eliminating ambiguities and strengthening tax governance.
5. What Should Companies Do Now?
To ensure immediate compliance and reduce risk, companies should:
- Review internal bookkeeping and reporting processes.
- Confirm that internal or outsourced accounting teams are aligned with the new requirements.
- Update checklists and workflows for responding to IRS notices.
- Maintain well-organized documentation, especially for cross-border transactions.
- Work in an integrated manner with U.S. and Brazilian tax teams.
Being proactive is key to avoiding unnecessary disputes and ensuring tax stability throughout 2025 and 2026.
Conclusion: A Significant Step Toward Transparency and Legal Certainty in the U.S.
The enactment of the IRS Math and Taxpayer Help Act represents a major advancement in the relationship between taxpayers and the federal government.
For international companies, the law not only expands rights but also strengthens predictability, simplifies compliance, and reduces risks stemming from unclear IRS notices.
Drummond Advisors is prepared to assist Brazilian and global companies in interpreting and applying these changes efficiently, ensuring full compliance and security in their U.S. tax operations.
For personalized guidance or support with audits, tax planning, and compliance processes, contact our specialists through the available chat or via email at info@drummondadvisors.com.
More information: https://www.congress.gov/bill/119th-congress/house-bill/998
Written by Marcos Ferreira, Content Analyst at Drummond Advisors