Wednesday, March 6, 2019

WHAT TO KNOW ABOUT AN IRS STATUTORY NOTICE OF DEFICIENCY

This IRS notice goes by many names: Statutory Notice of Deficiency, SNOD, 90-day letter, and ticket-to-Tax Court. Many recognize it by the way it arrives – by certified mail from the IRS.

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Photo Credit: 
President Calvin Coolidge signing the income tax bill which established the U.S. Board of Tax Appeals; Andrew Mellon is the third figure from the right.


What’s a Statutory Notice of Deficiency?

When the IRS thinks you owe taxes, it sends a series of notices. These letters propose taxes, penalties and interest the IRS says you owe for each tax period.

If you don’t respond to these notices or don’t pay, the IRS will send a Statutory Notice of Deficiency. It’s commonly notice CP3219A or Letter 531.

This notice gives you important appeal rights


After you get the Statutory Notice of Deficiency, you’ll have 90 days to petition the U.S. Tax Court before paying the taxes, if you disagree with the IRS. You won’t get any extensions of time past the 90-day deadline, so it’s important to act quickly.

If you file a Tax Court petition, the IRS will often give you “extra” appeal rights. Here’s how that works:

The IRS gets notified that you have filed a Tax Court petition.


Your case goes to the IRS Office of Appeals. This is where you may be able to work out issues directly with the IRS – without having to go to Tax Court. IRS Appeals often helps taxpayers avoid expensive and time-consuming court appearances. Learn more about filing a case in the U.S. Tax Court.

The deficiency notice will also tell you about your right to contact your local Taxpayer Advocate Service office. The Taxpayer Advocate Service is a separate group within the IRS that can help if your issue is causing you financial hardship, you have tried repeatedly and are not receiving a response from the IRS, or you feel your taxpayer rights are being violated. The Taxpayer Advocate may be helpful if you have received the Statutory Notice of Deficiency in error. For example, if the IRS did not consider the information you timely submitted in response to a CP2000 or a mail audit notice.

The IRS sometimes includes Form 4089-B, Notice of Deficiency-Waiver, or Form 4549, Income Tax Examination Changes, to allow you to agree to the tax assessment.

This notice is the last stop before the IRS will start collecting your taxes
During the 90-day period, the IRS can’t start collecting your taxes. But if you don’t file a petition with the Tax Court, the IRS will charge you the taxes and send you a bill.

Then, if you don’t pay or make other arrangements with the IRS, the IRS can start collecting your bill with tools like federal tax liens and levies.

How to respond to a Statutory Notice of Deficiency


The most important thing is to respond by the deadline.

If you need to appeal an IRS decision, take action before the deadline in your Statutory Notice of Deficiency. Doing so will help you keep your appeal rights within the IRS and in Tax Court.

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