I received an IRS Notice of Deficiency for Income Taxes Owed. Now What?

A Notice of Deficiency (also known as the 90-day letter) from a government agency is the official written claim by such agency determining that you owe income taxes, along with interest and penalties, if applicable. The Notice of Deficiency also states that an assessment is being made with regard to your income tax owed. Some people simply pay the amount of the “deficiency” and end the matter. But the amount of the assessment/deficiency can be disputed because the government agency’s determination that you owe income tax is not always right.

Disputing a Notice of Deficiency for Income Taxes Owed

If you receive a Notice of Deficiency for income taxes owed and you dispute the assessment, you have 90 days to take action. The particular action required by you depends upon which government agency is making the claim. For example, if the government agency is the federal Internal Revenue Service, you can request a conference with an IRS appeals officer if the assessment is the result of an audit. If the appeal is not successful, you have two options, which are applicable anytime you receive a Notice of Deficiency. Your options are:

a) You can pay the disputed amount and file a claim for refund with the IRS. If the IRS denies your claim, you can file a lawsuit in the federal district court or with the United States Court of Federal Claims; or

b) You can file a petition with the United States Tax Court within ninety (90) days of the Notice of Deficiency to have the matter resolved in the tax court.

If you decide to challenge an assessment and are not fully informed about tax matters, you will need professional assistance.

Getting Help from a Tax Attorney or Tax Accountant

Some accountants and others have passed an examination, which entitles them to represent others with respect to tax matters in court, so your accountant may be able to assist you with your tax matter. In addition, all attorneys who are duly authorized to practice law have the ability to be admitted to represent clients in the federal district courts and regularly represent people with tax controversies. Many attorneys are already admitted to appear in one or more federal district courts. Since tax law is extremely complex and subject to many interpretations, it’s best not to go it alone. Especially  if you are attempting to discharge  your tax liability in a bankruptcy. Again, contact a tax attorney or tax accountant for help.

Case Studies: Legal Challenges and Solutions

Case Study 1: Resolving a Disputed Insurance Claim

Amy filed an insurance claim after her home was damaged in a severe storm. However, the insurance company denied her claim, stating that the damage was not covered under her policy. Unhappy with the decision, Amy sought legal help.

She contacted a lawyer specializing in insurance law who carefully reviewed her policy and assessed the damage. The lawyer discovered that the insurance company had misinterpreted the policy language. With the lawyer’s guidance, Amy filed an appeal and presented her case to the insurance company.

Eventually, the insurance company reconsidered its decision and approved Amy’s claim, providing her with the necessary funds to repair her home.

Case Study 2: Challenging an Employment Discrimination Charge

Michael, an employee at a large corporation, believed he was a victim of employment discrimination. He received a charge from the Equal Employment Opportunity Commission (EEOC) alleging that his employer had engaged in discriminatory practices.

Determined to fight for his rights, Michael sought legal representation from an experienced employment lawyer. The lawyer meticulously examined Michael’s case, gathering evidence and interviewing witnesses.

They worked together to prepare a strong defense and responded to the EEOC charge, providing a detailed rebuttal. Through the lawyer’s skillful advocacy, Michael successfully challenged the discrimination charge, and the EEOC dismissed the case.

Case Study 3: Navigating a Complex Estate Planning Process

Sarah’s elderly parents passed away without leaving a clear estate plan. As the executor of their estate, Sarah faced numerous legal complexities and uncertainties. She realized that professional assistance was essential to navigate the probate process smoothly.

Sarah engaged an estate planning attorney who guided her through the necessary legal steps. The attorney helped Sarah gather the required documentation, assessed the value of the estate, and facilitated communication with beneficiaries.

With the attorney’s expertise, Sarah was able to distribute the assets according to her parents’ wishes and fulfill her responsibilities as the executor effectively.