What Seattle Taxpayers Should Know About IRS Notice of Deficiency

Posted on September 17, 2021

Not everyone is required to file federal taxes. But what happens when you think you’ve filed your taxes correctly but receive an IRS Notice of Deficiency telling you that the IRS is proposing additional taxes? Whether or not you need to file your annual tax return depends mainly on your gross monthly income and what kind of taxpayer status you have. When people who are meant to file choose not to or do it incorrectly, they can miss out on potential refunds, but more importantly, they may find themselves in trouble with the IRS.

What is the IRS Notice of Deficiency?

The IRS Notice of Deficiency is often referred to as a “ticket to the Tax Court” because it requires you to respond to the court.

The notice will provide information on why they are proposing additional taxes. One of the most common reasons the IRS may issue you a Notice of Deficiency is if a third party, such as your employer, reports income that you may have inadvertently omitted on your submitted return.

What does this mean for me?

The good news is that the notice is not a bill, and you are not yet required to pay the indicated amount. The statement gives you a specific time frame to assess the proposed amount. Whether you agree with the proposed assessment or not, you should still contact the IRS or reach out to a tax resolution professional. A tax resolution expert can help explain what your options are. If you choose to call the IRS, use the number on your notice to ensure you connect with the correct person or department. There are two options when you call the IRS – either let them know that you agree with the amount or file a petition. And, you don’t have to go to Tax Court personally.

When the IRS sends you a Notice of Deficiency, you have 90 days to file a Petition with the US Tax Court. You can’t file an extension for the 90-day window, but you can file a petition. Filing a petition comes with filing a non-refundable fee of about $60. If you meet the requirements, you may be able to have the filing fee waived.

You should file an amended return with new numbers for the correct amount and documents supporting your position when filing a Petition. If you fail to file a Petition with the Tax Court, the IRS will assess the tax, send you a bill, and begin the collection process.

What are the next steps?

Taxpayers who get a letter from the IRS that they owe more taxes may have several options for payment. They may be able to pay their balance due in one lump sum with cashier’s check, certified funds (cash), money order, personal checks accompanied by proper identification. Always include proof of identity, including social security card or driver’s license in conjunction with a taxpayer identification number for each individual paying. Always include a copy of this notification. And always have proof of delivery. Use an overnight courier delivery services for next day delivery, or mail with signature confirmation.

If you have received a Notice of Deficiency from the IRS, immediate action is required. IRS Trouble Solvers™ in Seattle stands ready to assist with your Notice of Deficiency. Your BEST bet to resolve your IRS Debt!®