Taxpayers Who Under-Reported to Hear From IRS

More than 3 million taxpayers who failed to report part of their 1984 income can expect greetings from the Internal Revenue Service within the next two weeks, the agency said today.

The IRS found 3.2 million under-reporters when its computers matched 1984 tax returns against income-reporting forms, such as 1099 forms on which banks list interest paid and W-2s on which wages are reported.

Steve Pyrek, an IRS spokesman, said about half the notices of under-reporting will be sent to those who did not report part of their interest and dividends.

And this year, for the first time, notices to those taxpayers will automatically include a negligence penalty of 5% of the additional tax owed plus half the interest on the addition.

The IRS now has the capability of matching every tax return against information documents, such as W-2s and 1099s. Document-matching increased tax collections by $2.5 billion last year.