When someone files their taxes, they hope the IRS accepts the return and processes it timely. However, complications could arise with certain filings, and the IRS may audit a taxpayer. An audit might conclude with the tax agency determining the taxpayer owes additional taxes. In such instances, the IRS would likely issue a Statutory Notice of Deficiency to the taxpayer’s Texas address.
The statutory notice of deficiency letter
The Statutory Notice of Deficiency (SNOD) arrives by certified mail to the taxpayer’s last known address. The letter indicates that the IRS will assess additional taxes, interest and penalties. Once the assessment occurs, the taxpayer must make payments. However, the taxpayer has other rights when receiving such a letter.
The taxpayer may disagree with the IRS’s assessment, and there is a 90-day window to file a petition with the U.S. Tax Court. No extensions are possible, so the taxpayer must act without delay to file the petition.
Points about the SNOD
Taxpayers might not realize they may avoid tax court even after filing a petition. Per U.S. Tax Law, a petition with the tax court results in the case going to the IRS Office of Appeals. A proper appeal could work out in the taxpayer’s favor. If not, then arguing the case in the U.S. Tax Court may resolve the dispute.
Whether petitioning in court or appealing to the appropriate IRS office, the taxpayer must provide a compelling case that the tax assessment is unwarranted. Sometimes, the tax court may oversee a settlement between the IRS and the taxpayer. The settlement may be far lower than the original assessed amount.
