IRS Notice of Deficiency, also known as a 90-Day Letter
IRS Notice of Deficiency, also known as a 90-Day Letter
An IRS Notice of Deficiency, also known as a 90-Day Letter, is a formal document sent by the Internal Revenue Service when they determine that a taxpayer owes additional taxes. Key points include:
1. Explains proposed changes to your tax return
2. Specifies the amount of additional tax owed
3. Provides a 90-day window to respond (150 days if you’re out of the country)
4. Outlines your options:
– Agree and pay the amount
– Disagree and file a petition with the U.S. Tax Court
– Provide additional information to dispute the changes
5. Failure to respond may result in automatic assessment of the proposed tax
This notice is crucial as it’s your last opportunity to dispute the IRS’s findings before they assess the tax. It’s important to act promptly, as the 90-day period is strictly enforced. If you disagree with the notice, it’s advisable to seek professional tax advice to help navigate the process and determine the best course of action. Remember, filing a petition with the Tax Court doesn’t require immediate payment of the disputed amount.