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What Is an IRS Notice of Deficiency?

It’s common for people to make mistakes on their tax returns, but some of these mistakes don’t work out in your favor. If you make a mistake that means you underpaid your tax liability, then the IRS might send you a notice of deficiency.

You are likely wondering: What is an IRS notice of deficiency? Read on to learn more about this notice and what you need to do if you get one.

Understanding Your Notice of Deficiency

If you receive a notice of deficiency from the IRS, it likely means that you underpaid your taxes. It was probably by accident, such as forgetting to include income from a one-time job you were paid for. The IRS could have received information from the person or company that paid you.

Since your return doesn’t match the information the third party provided, the IRS will make an adjustment to your return. They will then send you the notice of deficiency to let you know that you owe them additional money in taxes.

If you agree with the notice, realizing that you made a mistake, you will sign the Notice of Deficiency – Waiver Form 4089 and pay the tax liability. If you don’t pay the tax liability when you send in the waiver form, you will likely be assessed interest and penalties on the amount of tax that you didn’t pay.

You do have the option to dispute the adjustment that the IRS made if you don’t agree. You must file a petition with the U.S. Tax Court, and you must do so by the date identified on your notice.

Need an IRS Tax Attorney?

Hopefully, you now understand more about what an IRS notice of deficiency is and what it means for you. If you would like help filing a petition with the U.S. Tax Court, or if you need assistance with another tax matter, contact an IRS lawyer with our nationwide office. The W Tax Group can be reached via the form below or by calling 877-500-4930.

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