Legal Definitions - erroneous tax

An erroneous tax refers to a tax amount that has been incorrectly calculated, assessed, or collected due to a mistake. This error can originate from the taxpayer, the taxing authority, or a clerical oversight, resulting in an overpayment or an underpayment of the actual amount legally owed.

Here are some examples to illustrate this concept:

• Example 1: Taxpayer Calculation Error

  A self-employed graphic designer is preparing their annual income tax return. While totaling their business expenses, they accidentally double-count a large software purchase, leading to an inflated deduction. This mistake reduces their reported taxable income and, consequently, the amount of tax they believe they owe. If the tax authority later identifies this miscalculation during an audit, the initial lower tax payment would be considered an erroneous tax because it was based on an incorrect deduction made by the taxpayer.

• Example 2: Tax Authority Assessment Error

  A city's property tax department mistakenly applies the tax rate for commercial properties to a homeowner's primary residence due to a data entry error in their system. The homeowner receives a property tax bill that is significantly higher than what they should legally pay for a residential property. The additional amount charged above the correct residential rate constitutes an erroneous tax because the taxing authority made a mistake in its assessment.

• Example 3: System or Clerical Processing Error

  A state's motor vehicle department sends out annual vehicle registration renewal notices. Due to a software glitch, the system incorrectly adds a non-existent "environmental surcharge" to thousands of renewal bills. A car owner pays the inflated amount without noticing the extra charge. The portion of the payment attributable to the phantom surcharge is an erroneous tax, as it was collected due to a system error and not based on a legally mandated fee.