IRS Notices for Capital Gain Corrections
If you filed your return before May 16th, and had 28% gains on collectibles or Section 1250 gain you may be entitled to a refund due to an IRS error. The original IRS instructions for the 2018 Schedule D Tax Worksheet did not reflect the new 2018 regular tax rates and brackets for certain Schedule D filers.
On May 15th the IRS updated the instructions for the new tax brackets and notified tax preparation software companies of the change so that they could update their programs.
The IRS error only impacts taxpayers who had long-term gains from collectibles, taxed at a maximum of 28% or who had long-term Section 1250 gain from the recapture of depreciation previously taken on real estate. If you had these categories of gain and filed after May 16th then your return should have been prepared under the correct instructions.
The error caused some taxpayers who were in a tax bracket below 25% to pay gains on these items at their maximum tax rate rather than at their individual ordinary income tax rate.
If you filed before May 16th and believe your return may be incorrect, you do not need to correct or amend your return. The IRS is scanning returns filed prior to May 16th and issuing notices with the correction, followed by refund checks 2-3 weeks after the date of notice.