Receiving a Notice of Deficiency (NOD) from the IRS can be an unsettling experience. However, it’s important to remain calm and take immediate action to protect your rights. By following these steps and seeking professional guidance, you can effectively address the situation and work towards a favorable resolution.
Understand the Notice of Deficiency (NOD):
The first step is to carefully read and comprehend the contents of the NOD. It will outline the tax year(s) involved, specific tax issues reviewed by the IRS, and the proposed adjustments or additional taxes owed. Understanding the details of the NOD is crucial for formulating an appropriate response.
Evaluate the Deadline:
The NOD will include a 90-day deadline by which you must file a Petition with the U.S. Tax Court. Take note of this deadline and ensure you have ample time to prepare your response. Failing to file a Petition within the specified timeframe will result in the IRS assessing the proposed tax, penalties and interest without further consideration.
Review the Supporting Documents:
Thoroughly review the supporting documents attached to the NOD. These documents may include the examination report, explanation of the changes, and other relevant information. Understanding the basis of the IRS’s proposed adjustments will allow you to better formulate your response.
Seek Professional Advice:
Given the complexity of responding to a NOD, it’s highly advisable to consult with a qualified tax attorney. A tax attorney can provide expert guidance, assess the validity of the IRS’s claims, and help you develop a strategic plan to challenge the proposed adjustments. They can also ensure that your rights are protected throughout the process.
Gather Supporting Evidence:
Work closely with your tax attorney to gather all necessary supporting evidence to refute the IRS’s proposed adjustments. This may include relevant financial records, documentation of deductions or credits claimed, and other pertinent documentation. Strong evidence can strengthen your case and increase the likelihood of a successful outcome.
Prepare a Comprehensive Response:
Based on the information gathered and with guidance from your tax attorney, prepare a comprehensive Petition in response to the NOD. Clearly articulate your position, addressing each specific issue raised by the IRS. Present your supporting evidence, legal arguments, and any applicable tax laws or regulations that support your position. It’s crucial to be thorough, organized, and persuasive in your response.
Submit Your Response:
Ensure that your Petition is fileded with the U.S. Tax Court before the 90-day deadline stated in the NOD. Consider using certified mail with return receipt to have proof of mailing and delivery. Keep copies of all correspondence for your records. Timely and properly filing the NOD with the U.S. Tax Court is necessary to protects your rights and provide you with the opportunity to dispute the IRS’s changes to your tax return.
Consult with a Tax Court Attorney:
A tax controversy attorney specializes in tax litigation and can guide you through the process of filing a Petition with the U.S. Tax Court. A tax court attorney will advocate on your behalf and present a strong case to protect your tax interests.
Receiving a Notice of Deficiency can be a daunting experience, but by taking the appropriate steps and seeking professional assistance, you can effectively address the situation. Act promptly, gather supporting evidence, consult with a tax attorney, and respond comprehensively to the NOD in the Petition you file with the U.S. Tax Court. Remember, seeking professional advice is crucial to navigate the complex tax laws and protect your rights throughout the process.
Connect with James Casey Tax Law today if you have questions related to this matter.