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IRS: Tax deficiency explained and how to fix it

Americans are preparing their tax returns this year and have already started submitting them to the IRS.

IRS tax return forms submitted for refunds in front of yellow background

What happens if you filled your return out but the IRS does not agree with what you’ve reported?

This is when the IRS can decide they disagree with your reported number and ask you for money.


How the IRS asks you for more money using a Deficiency Procedure

If the IRS evaluates a taxpayers return and decides the amount reported is wrong, they’ll notify the taxpayer of a deficiency procedure.

You’ll first be sent a Notice of Deficiency.

The IRS will usually send it after you file your tax return to let you know additional taxes are due with what you originally reported.


IRS: When will my tax refund be released?

Notice of Deficiency notifications can be about any of the following

  • Income taxes
  • Estate and gift taxes
  • Self employment taxes
  • Withholding taxes

You’ll have 90 days from when you receive the letter to open a case in Tax Court.

The time limit changes if it’s being mailed to an address outside of the country.


Keep these tips in mind while filing tax returns

You need to mail or file online your petition to the court.

You must have it postmarked within 90 days of your deadline if mailing it.

If you choose to ignore the notice you may lose your chance to disagree with the IRS’ claim.

You’ll then be stuck owing what they say you owe.

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