A tax deficiency, as recognized by the Internal Revenue Service (IRS), is a discrepancy between the amount of taxes you have reported on your return and what the IRS calculates you owe. This discrepancy often arises when the income you reported on your tax return differs from the income reported to the IRS by your employers or financial institutions.
If the tax return you filed presents a different sum from the income information provided by your employers, this would be classified as a tax deficiency.
The IRS sends out a deficiency notice, also known as a statutory notice of deficiency, a 90-day letter, or a “ticket” to the U.S. tax court, after thoroughly assessing your submitted documents and tax reports.
So, what exactly does a notice of deficiency entail?
A notice of deficiency is an official written claim or legal determination made by the IRS asserting that a taxpayer owes additional income taxes.
However, it is crucial to understand that this notice of deficiency is not a bill. Therefore, while the receipt of such a letter may initially trigger concern, there is no immediate cause for alarm. The notice is primarily a comprehensive outline of your tax information as received and processed by the IRS, highlighting proposed changes due to the identified discrepancy. The purpose of this notice is to inform you about the difference between your reported taxes and the IRS’s calculation, providing you an opportunity to either agree with the changes or dispute them.
Here is what you should do:
Remember, every tax situation is unique. It is important to consult with a tax professional to ensure you are taking the right steps. Please contact WM tax attorney, Kelly Swartz, should you need any further information or if you receive a deficiency letter from the IRS.
Many small businesses are required to report their beneficial ownership information (BOI) to the Financial…
A new addition to the family is an incredible blessing. With this precious gift comes…
Trademark protection is designed to secure a business asset that is unique to your business…
So … you are purchasing a home or other piece of residential real estate in…
Litigation can be a lengthy, costly, and emotionally draining process. As an attorney who practices…
Imagine this scenario: there is a certain corporation with 400 business units. Each business unit…