Understanding Your Rights: Dealing with an IRS Notice of Deficiency

Receiving a notice from the IRS can be a nerve-wracking experience for anyone. But perhaps one of the most anxiety-inducing notices is the Notice of Deficiency. This document is sent when the IRS believes that you owe additional taxes based on discrepancies found in your tax return. However, it’s essential to understand that as a taxpayer, you have rights when dealing with this situation.

What is a Notice of Deficiency?

A Notice of Deficiency, also known as a 90-day letter, is a formal communication from the IRS informing you that they have made changes to your tax return, resulting in additional taxes owed. This notice typically occurs after the IRS has conducted an examination of your tax return and identified discrepancies or errors. It outlines the proposed changes to your tax return and provides you with an opportunity to dispute the changes.

Your Rights as a Taxpayer

When you receive a Notice of Deficiency, it’s crucial to understand that you have specific rights guaranteed by law. These rights are designed to ensure that you have a fair and impartial process for resolving disputes with the IRS. Here are some of the key rights you have:

Right to Challenge the IRS: You have the right to challenge the IRS’s proposed adjustments by filing a petition in the United States Tax Court within 90 days of the date of the notice. This allows you to present your case before a judge who will review the evidence and then make a decision.

Right to Appeal: If you disagree with the Tax Court’s decision, you have the right to appeal to a higher court, such as the U.S. Court of Appeals or the U.S. Supreme Court. This ensures that you have multiple avenues for seeking resolution if you believe the IRS’s assessment is incorrect.

Right to Representation: You have the right to be represented by a qualified tax professional, such as a tax attorney, certified public accountant (CPA), or enrolled agent, throughout the examination and appeals process. Having professional representation can be invaluable in navigating the complexities of tax law and advocating for your rights.

Right to a Collection Due Process Hearing: If you do not agree with the IRS’s proposed collection actions, such as liens or levies, you have the right to request a Collection Due Process (CDP) hearing. During this hearing, you can present evidence and arguments as to why the proposed collection actions should not proceed.

Right to Confidentiality and Privacy: The IRS is required to protect your confidentiality and privacy throughout the examination and appeals process. Your tax information cannot be disclosed to third parties without your consent, except in limited circumstances allowed by law.

Final Thoughts

Receiving a Notice of Deficiency from the IRS can be a daunting experience, but it is important to remember that you have rights as a taxpayer. By understanding these rights and taking proactive steps to address the notice, you can manage the process effectively and advocate for your interests. Whether you choose to challenge the IRS’s proposed adjustments or seek alternative resolution options, having a clear understanding of your rights is key to achieving a favorable outcome.

If you receive a notice from the IRS contact Kelly Swartz to learn more about your options at 321-341-5144 or kelly@uslegalteam.com.

Attorney Kelly Swartz advises individuals and businesses on the optimal tax treatment for agreements, transactions, and planning opportunities that may affect them. Despite the complexity of tax, she works with clients to give them a plain language explanation, providing clear direction in the client’s best interest to resolve tax audits and controversial cases.