IRS Notices

The short version

If the IRS thinks you owe more tax, they will send you a formal letter called a "notice of deficiency." This letter is very important because it tells you how much the IRS believes you owe and explains your rights to challenge that amount. You must respond to this notice in a timely way if you disagree, or you will lose your right to challenge it in tax court.

The law this is built on

Every point below comes from the authority named next to it. Verify the current text before relying on it.

26 U.S.C. § 6212(a)
The IRS must send you a notice by certified or registered mail if they determine there is a tax deficiency (meaning you owe more tax). This notice is sent to your last known address.
Why it matters: This rule means the IRS cannot just demand more money without first sending you a formal letter explaining their reasoning and giving you a chance to respond.
26 U.S.C. § 6212(b)
The IRS can send the notice to your last known address, even if you no longer live there, as long as they haven't been officially notified of a new address.
Why it matters: It is your responsibility to tell the IRS if you move, or you might not receive important notices.
26 U.S.C. § 6213(a)
After the IRS sends a notice of deficiency, you have 90 days (or 150 days if you are outside the U.S.) to file a petition with the Tax Court to challenge the IRS's findings.
Why it matters: This sets a strict deadline for you to challenge the IRS's decision in court before you are legally required to pay the amount they say you owe.
26 U.S.C. § 6213(a)
During the 90-day (or 150-day) period, and until the Tax Court's decision is final, the IRS generally cannot try to collect the tax from you.
Why it matters: This means you get a chance to argue your case without the IRS immediately taking steps to collect the money.

Words you need to know

Notice of Deficiency: A formal letter from the IRS stating that they believe you owe more tax than you reported on your tax return. It explains the reasons for their decision and the amount they think you owe.
Tax Deficiency: The amount of tax the IRS believes you owe, which is more than what you originally paid or reported on your tax return.
Last Known Address: The address the IRS has on file for you. It is your responsibility to update the IRS if you move.
Petition to the Tax Court: A formal request filed with the U.S. Tax Court to dispute the IRS's notice of deficiency. This is how you challenge the IRS's findings in court before paying.
Collection Activities: Actions the IRS takes to get unpaid taxes, such as liens on property or seizing bank accounts. These are generally paused during the notice of deficiency period.

Your rights

✓You have the right to receive a formal notice from the IRS if they believe you owe more tax.
✓You have the right to challenge a notice of deficiency in U.S. Tax Court before paying the disputed tax.
✓The IRS generally cannot try to collect the disputed tax during the 90-day (or 150-day) period after sending a notice of deficiency.
✓You have the right to respond to the IRS, even if you do not want to go to court.

How the process actually works

1
IRS Review
After you file your tax return, or after an audit.
The IRS reviews your tax return and finds what they believe are errors, or they get information that suggests you owe more tax.
2
Proposed Changes
Before a notice of deficiency, sometimes after an audit.
The IRS will often first send you a letter proposing changes to your tax return and explaining their reasons. This is usually not a formal notice of deficiency yet.
3
Notice of Deficiency Sent
After preliminary discussions, or when the IRS is ready to finalize their determination. (26 U.S.C. § 6212(a))
If you don't agree with the proposed changes, or don't respond, the IRS sends you a formal Notice of Deficiency by certified or registered mail to your last known address.
4
Your Decision Time
Immediately after receiving the notice.
You receive the notice and have a limited time to decide how to respond. You can agree, try to negotiate, or challenge it in Tax Court.
5
File Petition (Optional)
Within 90 days (150 days if outside the U.S.) of the notice being mailed. (26 U.S.C. § 6213(a))
If you disagree with the IRS, you can file a petition with the U.S. Tax Court to legally challenge the notice of deficiency.
6
IRS Cannot Collect
After the notice is mailed and until the Tax Court's decision is final. (26 U.S.C. § 6213(a))
During the period to file with Tax Court and while your case is pending, the IRS generally cannot try to collect the tax they say you owe.

Deadlines that can end your case

Petition Tax Court (U.S. Residents)
90 days from the mailing date of the Notice of Deficiency
If you miss this deadline, you generally lose your right to challenge the deficiency in Tax Court without first paying the tax. After the deadline, you would likely have to pay the tax, then file a claim for refund, and sue in District Court or the Court of Federal Claims if denied.
Petition Tax Court (Outside U.S.)
150 days from the mailing date of the Notice of Deficiency
Similar to the 90-day deadline, missing this means you lose your right to challenge the deficiency in Tax Court before paying.

Costly mistakes

✕Ignoring the notice: Not opening or reading IRS mail, especially if it's certified.
✕Missing the 90-day (or 150-day) deadline to file a petition with the Tax Court.
✕Assuming the IRS is always wrong or always right without looking at the facts.
✕Not updating your address with the IRS, causing important notices to go to the wrong place.
✕Paying the tax shown on the notice without fully understanding your options, if you disagree with it.
✕Calling the IRS without having your documents ready or knowing what you want to achieve.

Your checklist

Open all mail from the IRS immediately.
Note the date on any Notice of Deficiency you receive.
Read the entire notice carefully to understand why the IRS believes you owe more tax.
Gather any records or documents that support your original tax return or your position.
Decide if you agree with the IRS's findings.
If you disagree, contact the IRS or a tax professional to discuss your options before the deadline.
If you wish to go to Tax Court, file your petition within 90 days (or 150 days if applicable).
Keep copies of all correspondence you send and receive from the IRS.

Common questions

What if I didn't receive a Notice of Deficiency?

The IRS is required to send the notice to your 'last known address' by certified or registered mail. (26 U.S.C. § 6212(a), (b)). If you didn't update your address with the IRS, the notice might have been sent to an old address. You might still be bound by the deadline if the IRS can prove it sent the notice correctly.

Can I negotiate with the IRS after receiving a Notice of Deficiency?

Yes, you can still try to resolve the issue with the IRS. However, the 90-day (or 150-day) deadline to file a petition with the Tax Court continues to run while you negotiate. It's often wise to file the petition to protect your court rights, even if you're talking to the IRS.

What happens if I miss the 90-day deadline?

If you miss the 90-day (or 150-day) deadline, you generally lose your right to challenge the tax in Tax Court. The IRS can then assess the tax and begin collection actions. You would then typically have to pay the tax first, then file a claim for a refund, and potentially sue in a different court if your refund claim is denied.

What if I agree with the Notice of Deficiency?

If you agree, you can sign and return the waiver form (Form 870 or similar) included with the notice. This typically allows the IRS to assess the tax, and you can then pay it. This stops the interest from adding up on the disputed amount and closes the case faster.

How this changes by state

IRS Notices are related to federal income tax, which is governed by federal law. Therefore, the rules for these notices, including the deadlines and your rights to challenge them in Tax Court, are generally the same across all states. However, individual states may have their own tax collection agencies and rules for state income tax deficiencies. You would need to check your specific state's revenue department website or laws to understand their processes for state tax notices.

When you need a lawyer

You should consider getting help from a tax attorney or other tax professional if the amount of tax the IRS says you owe is significant, if the issues are complex, or if you feel overwhelmed by the process. If you want to challenge the notice in Tax Court, or if you believe the IRS has made a mistake and you need help arguing your case, a lawyer can represent you and protect your rights.

Do this today

→Review any IRS notices you've received and note the date on them.
→If you have an open tax issue, ensure the IRS has your current mailing address.
→Gather any tax records that might be relevant to your tax returns or IRS notices.
→If you have received a Notice of Deficiency, mark the 90-day (or 150-day) deadline on your calendar.

This lesson is legal information for educational purposes only, based on 26 U.S.C. § 6212; 26 U.S.C. § 6213. It is not legal advice and does not create an attorney-client relationship.