A Notice of Deficiency, also known as a 90-day letter, is an official written claim by a government agency—usually the Internal Revenue Service—that has found you owe income taxes, and often interest and penalties. ...If you've recently received an IRS Notice of Deficiency, you may have some questions and concerns.

Why Did I Receive an IRS Notice of Deficiency?

An IRS Notice of Deficiency is issued when the IRS is proposing a change to a tax return because they found that the information reported on the return does not match their records. Known as IRS Notice CP3219, this informs you that a third party filer, like your employer or another financial institution you have accounts with, has sent in information that doesn’t coincide with what you recorded.

As an example, a taxpayer may earn wages from two employers. At the end of the year the employers will issue W2s to the taxpayer/employee and to the IRS. If the taxpayer only reports one of the W2s on his return then this will trigger a review of unreported income. The IRS will then compare the tax return to their records and will find that the taxpayer did not report one of the W2s. The IRS then adds that unreported W2 to the taxpayer’s return, which will likely change the tax.

You also may receive a statutory notice of deficiency if the IRS sent you one or more pre-assessment letters requesting income, credit, or deduction verification, but never received a response from you.

If it does change the tax, whether it lowers it or increases it (thus creating a balance), the IRS will issue a Statutory Notice of Deficiency to inform the taxpayer of the proposed change to the return. The notice will explain the proposed increase or decrease in tax, how that change was calculated and how that proposed amount can be challenged or agreed to.

Is an IRS Notice of Deficiency a Tax Bill?

No, this notice simply shows the information the Internal Revenue Service eceived and explains how it will affect your tax, and gives you contact information should you choose to file a petition with the tax court. If you’ve received an IRS Notice of Deficiency, contact us today and let our team help you come up with a plan.

How do I challenge a Notice of Deficiency?

You have the right to petition the Tax Court

You have the right to challenge IRS deficiency determination, including penalties, before making any payment by filing a petition with the U.S. Tax Court. To file a petition, send that petition to the following address:

United States Tax Court
400 Second Street,
NW Washington, DC 20217

See: CP3219A

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