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Ninety-day Letter: What You Need to Know About IRS Tax Notices
Definition & Meaning
A ninety-day letter is a formal notification issued by the Internal Revenue Service (IRS) to a taxpayer, indicating that there is a tax deficiency. This letter requires the taxpayer to respond within ninety days. If a taxpayer receives a ninety-day letter, they have the right to dispute the alleged tax deficiency in tax court. This letter is also referred to as a statutory notice of deficiency, which is issued when a taxpayer does not initiate an appeal after receiving a pre-action notice from the IRS.
Table of content
Legal Use & context
The ninety-day letter is primarily used in tax law. It serves as a critical document in the tax dispute process, allowing taxpayers to formally contest the IRS's claims regarding their tax obligations. Taxpayers can manage the appeal process themselves with the appropriate forms, such as those available through US Legal Forms. Understanding this process is essential for individuals facing tax audits or disputes.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A taxpayer receives a ninety-day letter stating that the IRS has identified a $5,000 tax deficiency based on an audit of their previous year's return. The taxpayer must respond within ninety days to contest this finding.
Example 2: A business owner receives a ninety-day letter after failing to respond to an earlier IRS notice regarding discrepancies in reported income. They can challenge the IRS's assessment in tax court. (hypothetical example)
Relevant laws & statutes
The ninety-day letter is governed by the Internal Revenue Code, specifically:
26 USCS § 6212 - Notice of deficiency.
26 USCS § 6213 - Restrictions applicable to notices of deficiency.
Comparison with related terms
Term
Definition
Key Differences
Ninety-day letter
A formal notice of tax deficiency from the IRS.
Specific to tax disputes and response requirements.
Statutory notice of deficiency
Another name for a ninety-day letter.
Same document, different terminology.
Pre-action notice
A notice sent before a statutory notice of deficiency.
Precedes the ninety-day letter and is not a formal deficiency notice.
Common misunderstandings
What to do if this term applies to you
If you receive a ninety-day letter, take the following steps:
Read the letter carefully to understand the deficiency claimed by the IRS.
Gather any relevant documentation to support your case.
Consider responding to the letter within the ninety-day timeframe to dispute the claim.
You can use US Legal Forms to find templates that can assist you in preparing your response.
If the situation is complex, it may be wise to consult with a tax professional for guidance.
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