Check out our Resources section for free tax guides, forms, and more!

855-476-6920 Se habla español

Here’s What to Do with an IRS Notice of Deficiency

  |   Last modified on

Your returns are filed and you’re finally relaxed knowing that you’ve met your tax obligations. Then, a few months down the road you receive a certified letter from the IRS – a Notice of Deficiency. Yikes! The good news is that there’s no need to panic. This isn’t a bill and you have time to address the situation. Keep reading to learn more about why you received this IRS notice and what to do next.

What is an IRS Notice of Deficiency (CP3219A)?

An IRS Notice of Deficiency, or Notice CP3219A, is sent when there is a discrepancy in your tax information. This IRS notice lets you know that the information you reported on your tax return is different than what third parties, such as your employer or financial institutions, have reported to the IRS.

Once the information is received from a third party, the IRS adjusts the tax amount due accordingly. The Notice of Deficiency is the first step in reconciling your tax records. It will explain how the amount was calculated, what to do if you disagree with the amount, and how to challenge the decision in U.S. Tax Court, if desired.

How to Handle a CP3219A Notice

If you receive a Notice of Deficiency, do not ignore it. There are certain things you must do before the IRS makes its final assessment.

  1. Thoroughly review the notice. Compare the information provided with what you submitted on your tax return. If you don’t have your return handy, you can request a copy from the IRS by sending Form 4506. You can also download a copy by logging into your IRS account online.
  2. Respond to the notice. You have 90 days from the date on the notice to dispute the changes, file a challenge in tax court, or you can agree with the assessment.

Agree With The Changes? Great!

If you agree with all the changes made by the IRS and have no additional income, credits, or expenses that you need to report, you’re all set. You don’t need to amend your return. All you have to do is sign Form 5564, Notice of Deficiency – Waiver, which is included in your deficiency notice, and send it to the IRS.

Disagree With The Notice of Deficiency? Here’s What You Need to Do

If you partially agree or completely disagree with the changes, and have additional information for the IRS to consider, mail or fax the information along with Form 5564. You can also contact the third party that reported the information in question (e.g. employer) and ask them to correct it.

You also have the right to challenge the proposed changes by filing a petition with the U.S. Tax Court within 90 days of the letter on your notice. During this time, the IRS is barred from assessing or enforcing the collection of the proposed tax debt.

What Happens If I Don’t Respond?

If you fail to respond to Notice CP3219A within the 90-day period, the IRS will move forward with the proposed tax changes. If you owe additional taxes, you will receive a bill and the collections process will commence.

Be aware that the IRS will charge penalty and interest fees on any unpaid taxes. That’s why it’s so important to Immediately address the changes and pay the balance due if you agree with the Notice of Deficiency.

Need Help?

If you’re unsure how to handle an IRS notice, reach out to a tax professional for help. They can ensure the information on your return is accurate and work with the IRS on your behalf. If you’re unable to pay your taxes, they can put you in an affordable payment plan or see if you qualify for other tax relief options.