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Notice of Deficiency – CP3219

Notice CP3219 is also known as the “90 day letter”, or the statutory notice of deficiency. Taxpayers receive this notice when the IRS has determined that they owe taxes. Taxpayers may owe back taxes due to the removal of certain credits or deductions that they do not qualify for, or possibly the exclusion of certain income.

The IRS receives information from third parties (W-2s, 1099s) regarding your tax liabilities. If the information on your return (specifically income, credits and deductions) does not match the information from third parties, the IRS may send a notice or carry out an audit.

If You Agree

Read the notice carefully when comparing the details with those found in your own tax records. If you agree with the IRS assessment, you will need to sign the enclosed Form 5564, Notice of Deficiency – Waiver, and mail it to the IRS at the address on the notice. You are required to pay the entire taxes owed, including penalties and interest.

If You Do Not Agree

If you disagree with the IRS assessment, you have 90 days from the date of the notice to file a petition in the U.S. tax court. You may also send information that explains and substantiates your disagreement. The IRS will review your information and will allow you to file a petition with the tax court.

After the 90-day period, if the balance is not paid or a petition is not filed, the IRS assessment becomes final. The IRS may begin collection action after 90 days.

When a petition is filed in the tax court and a decision is pending, the IRS assessment is not considered final, and penalties and interest do not accrue on the taxes owed. Generally, after you file a petition with the tax court, the court refers the case to the IRS Office of Appeals. The Office of Appeals is an independent organization within the IRS, which resolves disputes between taxpayers and the IRS in a fair and impartial manner. The majority of the cases that come to the tax court are referred to the Office of Appeals for resolution.

An attorney, CPA, or enrolled agent can represent you during an appeal. To resolve tax disputes in the Office of Appeals or the tax court, it is advisable to seek representation from a tax professional.