A notice of deficiency is a letter from the IRS claiming you have to pay an additional tax and/or penalties for one or more tax years. If you’ve received a letter like this in the mail, it’s likely that you’re at the end of your audit or you did not file a tax return. The IRS will send you this notice by certified mail and it will explain how much money the IRS has deemed that you owe.
If you made a mistake and accidentally forgot to pay a portion of your taxes, then you should just be prepared to pay the amount owed and be on your way. However, this notice is not a bill, and if you disagree with what the IRS states, then you can file a petition with the U.S. Tax Court.
Submitting a Petition
After you receive your notice of deficiency, you have 90 days from the date on the notice to dispute the additional tax by filing a petition with the U.S. Tax Court. You might be thinking: but I was on a long trip out of the states and now it’s past 90 days! If you meet the requirements for this rare scenario, then you actually have 150 days to file the petition.
In your petition, you must include a written statement explaining your side of the story. This should contain your reasoning of why you don’t owe additional tax or have to file a tax return.
It can be difficult to file the petition correctly on your own, so you’ll need to consult a tax attorney regarding filing a petition with the U.S. Tax Court.
You must take a notice of deficiency seriously. The notice of deficiency is the last notice or letter you will receive from the IRS before the IRS assesses additional tax and/or penalties against you and starts the collection process. It’s important that you review the notice and take action by timely and appropriately filing a petition with the U.S. Tax Court.
Preparing for an Appeal
In your notice of deficiency, there will be instructions on how to appeal by filing a petition with the U.S. Tax Court. However, it’s important to know that from this point forward, you are dealing with both the IRS and the Tax Court. The Court will get involved at the end of the appeal if you cannot resolve your case with the IRS Office of Appeals. You’ll need to contact a tax lawyer to navigate this process.
When preparing an appeal, you’ll need to gather critical documents and information, including any tax documents related to the amount of money owed, including your tax return. Review those documents and compare them with the notice of deficiency to check for discrepancies. You’ll also want to collect any additional records that explain the difference between your return and the notice of the deficiency. This can be different depending on the case, but something like a bank statement for the year in question can be the most helpful.
If You Miss Your Deadline to Submit an Appeal
Unfortunately, the U.S. Tax Court will not give extensions or exceptions to the 90-day deadline to file a petition. If you missed the deadline, you’ll need to meet with a tax attorney to figure out your options. Depending on the circumstances of your case, you may be able to request audit reconsideration, file an offer-in-compromise, or file a tax return (if one wasn’t filed to begin with).
For Help With Your Notice of Deficiency, Contact Mindy Meigs
The U.S. Tax Court system is too complicated to handle on your own. To ensure you put the proper explanation in your petition and prepare the right documents for your appeal, contact tax attorney Mindy Meigs to ensure the process goes smoothly.