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3 Things You Need to Know When You Receive a Notice of Deficiency

A Notice of Deficiency is an official tax assessment letter from the IRS. The notice is informing you of your rights and what you have to do to contest the tax assessment.

You Have 90 Days

The Notice of Deficiency is also referred to as a 90-day letter. You have 90 days to file a petition with the U.S. Tax Court to dispute the tax liability.

If you don’t agree with the tax assessment, you should petition the Tax Court. If you aren’t sure why the additional tax is being assessed, contact a tax attorney for legal assistance.

If 90 days pass and you don’t do anything, the tax will be assessed on your account. Your case will then move to collections and you will start receiving bills from the IRS. If you don’t pay, penalties and interest will accrue, and eventually the IRS may begin enforced collection activities.

You Can Avoid Paying the Tax Upfront

One of the unique attributes of Tax Court is that you aren’t required to pay the disputed amount until your case is resolved. The IRS also can’t attempt to collect the tax while your case is pending, so you won’t have to worry about bank account levies or wage garnishments.

However, if you miss the deadline to petition the Tax Court, you will generally be required to pay the full amount of the tax and then sue for a refund.

Your Case May Not Go to Trial

Even if you decide to petition the Tax Court, your case may not end up going to trial. The IRS will have to file an Answer to your petition. After the answer, you typically have to opportunity to try to settle your case with IRS Appeals.

IRS Appeals is an independent office within the IRS. Depending on your situation, they may be willing to offer you a deal or they may not. You also have the option of conceding your case if it appears that you are unlikely to succeed at trial and settlement negotiations aren’t getting you anywhere.

Sometimes litigation is your only option. Contact a tax litigation attorney to get help disputing a tax assessment and responding to a Notice of Deficiency.

The Gartzman Law Firm can help you with back taxes and other IRS tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.