The Internal Revenue Service (IRS) will send a taxpayer a notice of deficiency notice if it determines that the person is responsible for paying more income tax. This situation arises when the information on a tax return does not match the information that the IRS has in its records. For instance, if a taxpayer does not submit a tax return for a given year, but the IRS thinks that the taxpayer owes tax for that year, the IRS will issue warnings to the taxpayer advising them to file a tax return and stating that they owe tax for that year.

Suppose the taxpayer does not prepare a tax return or respond to the IRS' inquiries. In that case, the IRS will ultimately commit to the taxpayer's money liability for the fiscal year and send this same taxpayer a written notification of deficiency. This will occur if the taxpayer doesn't produce a tax return or is responding to the IRS' inquiries.

How Does One Respond To A Notice Of Deficiency?

Before the Internal Revenue Service (IRS) sends a formal notice of deficiency to a taxpayer, it is required first to establish whether or not there is a need for the notice and then alert the taxpayer. The statutory notice of deficiency will initiate the procedure if:

• If a taxpayer does not submit a tax return, but the IRS deems that the person still has a tax burden, the taxpayer will be subject to a tax penalty.
• The Internal Revenue Service will start issuing letters and notifications to the taxpayer if it is decided that any of the reasons listed above is accurate.

After that, it is up to the taxpayer to decide whether or not they agree with the amount of tax the IRS has concluded they are responsible for paying. If the taxpayer is willing to waive the shortfall, the Internal Revenue Service (IRS) will send them a notice of deficiency waiver, which they may sign and then pay the tax. The taxpayer has the option of doing one of the following if they disagree with the amount of tax that the IRS has decided they are responsible for paying:

• Please make an additional effort to settle the disagreement with the IRS by providing them with more information.
• You have ninety days from the date printed on a statutory notice of deficiency to file a petition with the United States Tax Court.
• The taxpayer can legally challenge the deficiency determination made by the IRS when they file a petition with the Tax Court. Additionally, filing a petition with the Tax Court prevents the IRS from assessing the tax and taking collection action until after the Tax Court has made its determination.
• Within the first ninety days after mailing the notice of deficiency, if the taxpayer does not reply or file a petition with the Tax Court, the Internal Revenue Service (IRS) will assess the calculated tax and initiate collection operations, if appropriate.

Notices of Deficiency Come in a Variety of Forms

The Internal Revenue Service (IRS) gives taxpayers several notifications of deficiencies tailored to their circumstances. Detailed explanations of each notice of inadequacy category may be found below.

IRS Letter 3219

The Internal Revenue Service (IRS) issues notice of deficiencies in the form of letter 3219 to taxpayers with whom it conducted an email exchanges audit that did not culminate in an agreement with the taxpayer. A correspondence audit requests additional information about a particular issue or item on the taxpayer's tax return.

Notice CP3219A from the IRS

Taxpayers who the IRS has concluded did not adequately state their tax due on their tax return will get a notice of deficiency in the form of a CP3219A notice from the IRS. This is based on information the Internal Revenue Service obtained through tax records provided by third parties such as employers, such as W-2s and 1099s.

IRS Letter CP3219B

The Internal Revenue Service (IRS) sends business taxpayers a letter called CP3219B as a notice of deficiency if it determines that the taxpayers underreported their tax responsibilities on their tax returns.

IRS Letter CP3219C

The Internal Revenue Service will issue letter 4800C to a taxpayer. Suppose the taxpayer does not answer letter 4800C at all or does not react appropriately to the letter. In that case, the Internal Revenue Service (IRS) may issue CP3219C to the taxpayer as a notice of deficiency.

Notice CP3219N from the IRS

Individuals who did not submit a tax return but for whom the IRS determined due to a tax burden based on the information given by third parties will often get a notice of deficiency waiver in the form of a CP3219N from the Internal Revenue Service (IRS).