A statutory notice of deficiency must be mailed
A statutory notice of deficiency is a critical document in the United States tax system. Here's what you need to know:
What is a statutory notice of deficiency?
A statutory notice of deficiency is a formal notice sent by the Internal Revenue Service (IRS) to a taxpayer informing them of a proposed tax deficiency. This notice is issued when the IRS believes that the taxpayer has failed to pay the correct amount of taxes, and the taxpayer has not filed a tax return or has filed a return that does not accurately reflect their tax liability.
When must a statutory notice of deficiency be mailed?
According to the Internal Revenue Code (IRC) Section 6212, a statutory notice of deficiency must be mailed to the taxpayer at least 30 days before the expiration of the statutory period for filing a petition with the United States Tax Court. This period is typically 90 days from the date of mailing the notice.
What happens if a statutory notice of deficiency is mailed?
If a statutory notice of deficiency is mailed, the taxpayer has 90 days from the date of mailing to:
- File a petition with the United States Tax Court to contest the proposed deficiency.
- Pay the proposed deficiency in full.
- Make arrangements to pay the proposed deficiency through an installment agreement.
If the taxpayer fails to respond to the statutory notice of deficiency, the IRS can proceed with collecting the proposed deficiency through various means, including liens, levies, and seizures.
Consequences of not responding to a statutory notice of deficiency
If a taxpayer fails to respond to a statutory notice of deficiency, they may be deemed to have waived their right to contest the proposed deficiency. This means that the IRS can proceed with collecting the proposed deficiency without further notice or opportunity for the taxpayer to contest the amount owed.
In summary, a statutory notice of deficiency is a critical document that informs taxpayers of a proposed tax deficiency and provides them with a 90-day period to respond. Failure to respond to this notice can have serious consequences, including the loss of the right to contest the proposed deficiency.