In a press release issued November 17, 2009, the Treasury Inspector General for Tax Administration (TIGTA) announced that millions of taxpayers may owe taxes due to the effect of the Making Work Pay Credit (MWPC).

The MWPC is advanced to taxpayers through their wages by a decrease in federal income tax withholding. This creates the possibility that some taxpayers may have their taxes under-withheld at the end of tax years 2009 and 2010. Such taxpayers may also be assessed estimated tax penalties.

The MWPC uses new income tax withholding tables. However, the changes to withholding tables did not consider dependents who receive wages; single taxpayers with more than one job; and joint filers where one or both spouses have more than one job or both spouses work.

TIGTA recommended that the IRS increase media coverage, consider other advertising, and focus communications to taxpayers who may be affected.

The IRS plans to take at least some corrective action. And they should. The IRS is not totally at fault. Still, it’s one thing to help stimulate the down economy with a tax credit, and yet another to not inform taxpayers that they may be in for a surprise thios coming April 15th. And the IRS should also consider possibly waiving penalties.