Notice of Deficiency
LET THE TAX BILLS BEGIN.
After a CP2000 (or similar audit notice) has been issued, stating that the IRS has identified errors or omissions on your tax return, they provide an opportunity for you to explain it, either by submitting an explanation or filing an amended return that addresses the issue (or both). If the IRS doesn’t hear back—or finds your response to be insufficient or incorrect—they will issue a CP3219A, or Notice of Deficiency.
The Notice of Deficiency includes a proposed increase in tax, along with options:
- Pay the liability in full right away
- File a petition to Tax Court
- Argue your case with supporting documents directly with the IRS
As is readily apparent when reading the notice, this is a very serious situation. A timeline (typically 90 days) has begun on the assessment and collection process. Your options, while already limited, will decrease over time if the situation is not adequately addressed.
It is important that you take advantage of the time you do have to increase your odds of securing a successful outcome. Ignoring this notice will result in one thing, every time: a bill for more than the amount listed on the Notice of Deficiency (because of additional interest).
If you’ve recently received a Notice of Deficiency and aren’t sure what to do, a call to WatchGuard can be a great way to review your options. You have rights, including a right to representation, and it pays to take advantage of those rights.