Tips To Handle an IRS Notice of Deficiency

IRS Notice of Deficiency Help

There’s nothing worse than opening your mail, only to encounter bad news. Even more so when that worrying news comes from the IRS. Receiving a Notice of Deficiency from the IRS is enough to get anyone’s stress levels through the roof! This is true, even when you don’t know what a “Notice of Deficiency” actually means. If you’ve recently received a Notice of Deficiency, finding out more about your IRS tax problems is a must to finding a solution.

What is a Notice Of Deficiency?

Basically, a notice of deficiency is the way the IRS gives you a heads up about a discrepancy in your tax return. This occurs when the information provided through your IRS tax return doesn’t correspond with information sent by a third party such as employers and financial institutions.

But, what happens once the IRS becomes aware of this information mismatch? Any apparent difference between your reported tax returns and tax data reported by external sources trigger immediate IRS action.

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Before any investigation takes place, the IRS will charge you for the tax amount difference, in the form of a proposal. At this point you can proceed in a variety of ways, depending on your stance on the issue.

The Notification Of Deficiency serves a single purpose, informing you about the IRS tax problem so that you can solve it promptly.

IRS Problem Resolutions For A Notice Of Deficiency

Once you receive a Notice Of Deficiency, the first thing you should do is to evaluate the facts. Is a tax return discrepancy really there, according to your understanding? Do you consider that the IRS is making a mistake with this notification? Depending on your answer, what path to take to resolve your IRS tax problems.

What To Do If The Notice Of Deficiency Is Correct?

If you’ve figured out that your tax returns were indeed filed incorrectly, finding a resolution for your tax problem will be straightforward. Simply sign the IRS’s Notice of Deficiency Waiver, officially called form 5564 and send it over. You’ll also have to pay your overdue taxes, along with some penalties and added interest for the delay.

Keep in mind that if upon your evaluation of your tax information you discover even more unreported information, you’ll have to correct your tax return.

In the event that you over-reported instead of under-reported in your tax returns and owe no tax debt to the IRS, you can forget all about IRS tax problems. Just sign form 5564 and you’re good to go!

What To Do If The Notice Of Deficiency Is Incorrect?

Simply claiming there’s been a misunderstanding won’t cut it with the IRS. If you want to solve your IRS tax problems you’ll have to prove it.

The first thing you should do is communicate with the IRS. You can do this quickly over the phone, which is a great way to answer your questions and present your case. The more formal approach though is mailing form 5564 along with all the evidence you can gather to support your claim.

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Another way to help solve this IRS tax problem is reaching out to the third party that supplied the information. Having them correct their information is a great way to dispute and resolve your case.

Finally, you can file a petition with the U.S. tax court. Just remember to comply with the deadline, as there are no extensions.

Need help with IRS tax problems?

Nick Nemeth’s Law offices help you with any kind of IRS tax problem, including dealing with a notice of deficiency. We recommend not speaking to the IRS before learning more about your situation. If you wish to get professional help for your tax problems call us today at (972) 426-2553 to schedule your free consultation.

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