Is there a downside to applying refund to next year’s taxes?

Well, you lose the use of the money for the year.

Could there be an issue if the IRS determines that your refund is less than shown by the return?

The only downside that people experience is that they do not get the refund to use during the tax year. If you do not rely on or need the refund this year, then applying it to next year's taxes will work. 

Could there be an issue if the IRS determines that your refund is less than shown by the return?

The only issue that will occur is if the refund was less than what was showing and you reported the incorrect amount on 2019 taxes. You should pull a transcript towards the end of fall and see what was applied.

So, the IRS reduces the amount applied to 2019, to cover the discrepancy?

Would the IRS also mail any change to the refund?

Correct, and yes, if there is a discrepancy they will mail you a letter.

Thanks