Thanks for your question.
Sometimes the IRS will catch an error such as that in processing and will automatically correct it for you, send you a notice and send you the correct amount for the refund. You will have to watch your mail and/or your bank account if you elected direct deposit to verify the amount of your refund.
If they do not catch the error, you will need to file an amended return on Form 1040X to correct the amount of your withholding. If you are sent a paper check for the original amount of the refund, if you can send the check back to the IRS, write "Void" on the back of the check with a note that you are amending your return so the IRS can correct the amount of the refund or you can just pay the $3600 withholding correction with your Form 1040X. If you are sent a direct deposit, you can call your bank and ask that it be returned to IRS to be corrected or you can pay the extra $3600 with your Form 1040X. Then you will need to file the Form 1040X.
No, you will not get in trouble with the IRS if they or you correct the error timely. These typos happen all the time and they understand it. If you have to pay the $3600 and pay it by 04/15/2010, there will be no penalty and interest.
Hope this helps,
So it is possible for them not to even notice such a large error and actually send me that money? I mean, if they dont catch and correct it, is it even possible to have $4000 fed taxes taken out of only $19,000?
Lastly, is it possible for them to not send my refund at all and just send a letter for me to amend it or will they most likely either fix it, or send my refund and I send the irs the difference. I really need my refund (minus the 3,6000) to catch up on some bills asap and I heard ammended refunds takes months to get processed.