Deficiency Procedures

 

IRS Definition

A notice of deficiency must be issued when there is a proposed tax deficiency with which the taxpayer does not agree and:

  1. The statute of limitations is imminent and no extension can be obtained,
  2. The taxpayer does not respond to, or file a valid protest to, a 30-day letter, or
  3. The taxpayer requests the issuance of the notice in order to petition the case to the Tax Court.

More from H&R Block

The IRS follows certain rules called deficiency procedures to charge you taxes after an audit or CP2000/underreporter adjustment, or when the IRS prepares a tax return for you because you didn’t file one. Deficiency procedures mean that the IRS sends a series of notices:

  1. First, you’ll receive a 30-day letter that shows the additional taxes, penalties, and interest the IRS thinks you owe. This letter gives you 30 days to appeal the proposed amount within the IRS.
  2. If you don’t take any action after the first letter, or if your appeal within the IRS is unsuccessful, you’ll receive a 90-day letter (known as a Statutory Notice of Deficiency). This letter gives you 90 days to file a petition with the U.S. Tax Court to appeal the taxes.
  3. If you don’t take any action after the 90-day letter, or if your Tax Court appeal is unsuccessful, you’ll receive a bill from the IRS for the taxes, penalties, and interest you owe.

If you want to appeal the taxes after you receive the bill, your only option is to pay the amount and then file a formal claim for refund.

Learn what to do if you receive a deficiency notice and can’t pay your taxes.

Get help from an IRS expert

H&R Block’s experts can solve any IRS problem, no matter how complex.

Make an appointment

Or call 855-536-6504

Related Information

What To Do If You Can’t Pay Your Taxes

Learn about the different options when you can't pay or still owe money from a past return from the tax experts at H&R Block.

What You Need to Know About an IRS Statutory Notice of Deficiency

The Statutory Notice of Deficiency is part of a series of notices sent by the IRS to propose additional tax, penalties and interest. Learn more from the tax experts at H&R Block.

How to Handle IRS CP2000 Notices (Underreporter Inquiry)

Learn how the IRS matches your information to generate CP2000 notices, and how to handle one of these underreporter inquiries if the IRS contacts you.

Don’t Pay an IRS Penalty Without Looking Into Penalty Relief

The IRS grants four types of penalty relief, but many taxpayers don't ever ask. Learn how to request penalty abatement from the IRS.

How to Handle an IRS Audit

Learn what the IRS is looking for during an audit, the steps you should take to prepare for an IRS audit, and when it's best to get expert help.

How to Handle an IRS Business Tax Audit

Learn what the IRS is looking for during a business tax audit, the steps you should take to prepare for an IRS audit, and when it's best to get expert help.