The notorious 90-day letter. This gives us our day in court – Tax Court, that is. Matters like this are not part of the California court system since State law does not apply; however, the Tax Court has a branch . If the IRS has made proposed adjustments to your account, and you didn’t respond or couldn’t reach an agreement, then you will receive a notice of deficiency. The notice of deficiency allows you to go to the Tax Court and tells you the procedures to follow. If you don’t go to Tax Court in the time allotted you will receive a bill for the amount of tax due.
Q. I recently received a Notice of Deficiency. I sent in additional information to the IRS and now they say I owe less than what is in the notice. Either way – I still don’t agree with the IRS. Should I file a petition with the Tax Court as the notice directs, or should I continue to work with the IRS?
A. Nothing can extend the 90-day period for filing a petition. There are no exceptions. If you don’t file a petition before the end of the 90-day period and you do not resolve the matter with the IRS, the IRS will close your case and your right to any appeal will be lost. You should continue to work with the IRS, but as the 90th day comes near and if you are unsure of the outcome with the IRS, you should file a Tax Court petition to protect your appeal rights.
Once you file a petition and your case becomes docketed before the Tax Court your file will go to an Appeals office. Someone from the Appeals office will contact you to try to resolve your issues without the need for a trial.
Q. I received the Notice of Deficiency saying I need to file a petition with the United State Tax Court if I don’t agree. How do I do this?
A. If you don’t agree with the decision then write to the Tax Court address shown on the first page of the letter or visit their web site at www.ustaxcourt.gov to review the procedures and obtain forms.
Q. I never appealed my IRS office or field audit, and when I got the Notice of Deficiency, I did not file a petition with the Tax Court. Now the IRS is sending me bills and I don’t think I owe the tax. What do I do now?
A. Your case is closed as far as any question about how much tax you owe, so there is nothing for you to appeal. You have three options to get your case re-opened so the IRS can consider whether you owe any additional amounts:
Follow the instructions in Form 656 and file an Offer in Compromise, Doubt as to Liability.
Follow the instructions in Publication 3598 and request an Audit Reconsideration. Note that you must submit new information the IRS did not previously consider in order to have an audit reconsideration.
Pay the amount due in full and file a claim for refund. If the IRS disallows your claim you will have the right to appeal at that time.
To discuss this and other tax controversies, call Mitchell A. Port at (310) 559-5259 for tax help.