Statutory Notice of Deficiency

 

 


The Notice of Deficiency is often referred to as the "90-day Letter."  It is a legal document that provides a taxpayer with no more than 90-days to file a petition with the United States Tax Court to contest a proposed deficiency.  If the Notice is addressed to the taxpayer outside of the United States, the taxpayer has 150 days to file the petition.  There is a $60 fee payable to the United States Tax Court to file a Petition.  This is in addition to the cost of having your Petition prepared.

The 90/150 day period CANNOT be extended!  Under certain circumstances, the Notice of Deficiency can be rescinded, but this is not a common IRS practice.  If the taxpayer is just one day late in filing their Petition, the Tax Court will NOT hear the case. 

If you timely file your Tax Court Petition after receiving a Notice of Deficiency, under current procedures, you will have an opportunity for an administrative hearing before the Appeals Division.  Even if you were in Appeals previously and they issued the 90-day letter, you typically will get another opportunity to meet with Appeals to try and negotiate a settlement. 

While I was a manager in Appeals, we typically settled around 85% of our cases.  So, the odds are definitely in the taxpayer's favor that they can get their case resolved in Appeals without having to set foot in a courtroom.

Finally, the issuance of a Notice of Deficiency extends the statute by 90 days (or 150 if it is mailed to a taxpayer outside of the United States), PLUS another 60 days.