If you’ve recently received an IRS Notice of Deficiency, you may have some questions and concerns. Our Frequently Asked Questions can help you determine the correct course of action.

Why Did I Receive this Notice?

An IRS Notice of Deficiency is issued when the IRS is proposing a change to a tax return because they found that the information reported on the return does not match their records. As an example, a taxpayer may earn wages from two employers. At the end of the year the employers will issue W2s to the taxpayer/employee and to the IRS. If the taxpayer only reports one of the W2s on his return then this will trigger a review of unreported income. The IRS will then compare the tax return to their records and will find that the taxpayer did not report one of the W2s. The IRS then adds that unreported W2 to the taxpayer’s return, which will likely change the tax.

If it does change the tax, whether it lowers it or increases it (thus creating a balance), the IRS will issue a Notice of Deficiency to inform the taxpayer of the proposed change to the return. The notice will explain the proposed increase or decrease in tax, how that change was calculated and how that proposed amount can be challenged or agreed to.

Is this Notice a Bill?

No, this notice simply shows the information the IRS received and explains how it will affect your tax, and gives you contact information should you choose to file a petition with the tax court.

Can I Get an Extension on my Response Time?

No, unfortunately once the Notice of Deficiency has been issued, the IRS will not extend the time you have to respond or to file a petition with the U.S. Tax Court. That’s why it’s essential you get the professional tax help you need as soon as possible.

What if I Disagree?

If you think the IRS has received incorrect information or is mistaken, you can contact them with additional information and plead your case. You have 90 days from the date of the notice to dispute the claim.

Could My Notice of Deficiency be Due to Identity Theft?

It may be that someone else has used your social security number, and it’s essential you have a professional help you determine whether this is the case to avoid any further consequences. Community Tax Dallas practitioners are skilled in discovering identity theft. A Notice of Deficiency could be triggered by a fraudulent return that was filed by someone else using the taxpayer’s Social Security Number or it could be issued where someone is working using the taxpayer’s Social Security Number resulting in fraudulent W2s being issued to the taxpayer’s IRS account. You can contact the IRS and let them know the discrepancies are due to identity theft.

How Can Community Tax Dallas Help Me?

Our experienced practitioners can review the filed return and compare it to IRS records to ensure the IRS has correctly identified the problem. Community Tax Dallas can also make a recommendation on how to challenge the proposed changes. Community Tax Dallas may recommend filing an amended return or to pursue audit defense to prove the unreported item is not taxable. The Community Tax Dallas practitioners will be able to catch such discrepancies that go unnoticed by the IRS and will recommend a course of action to prevent those fraudulent items from changing the taxpayer’s return.

CTax_FinancialFreedom_PageGraphicThere is significant value in contacting Community Tax Dallas if you need IRS Notice of Deficiency help. Although the Notice of Deficiency will explain why the changes are made, the IRS will not specify what can be done to challenge the proposal. Community Tax Dallas can evaluate all options and can recommend the course of action most likely to be successful. If the taxpayer chooses to challenge the assessment, Community Tax Dallas will handle that challenge by compiling all required documents, drafting all necessary forms and representing the taxpayer in front of the IRS.

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