A notice from the Internal Revenue Service in the mailbox is rarely a welcome sight in the United States because it means you probably owe the government money. A notice of deficiency, also known as a CP3219A Notice, informs the recipient that there is a discrepancy in reported information. Essentially it notifies you that there are differences in reported income versus what they expected your income to be, which could mean you are entitled to a refund just as easily as it could mean you owe more. In either case, there are a few basic steps to take in response after receiving this notice.
Read and Verify the Notice
The first thing to do is carefully read the entire notice and verify that the information is accurate. Be sure to note anything you believe is in error so you can start searching for proof. The first fundamental decision is to determine if you agree or don’t agree with the notice. You need to figure out what exactly you believe to be true or in error for the next step. When in doubt, contact a qualified tax attorney, like those at IRS Trouble Solvers, LLC, for advice.
Send a Formal Response
If you approve of all of the information disclosed in the notice of deficiency, then you can respond by signing and sending Form 5564. This means you recognize the discrepancy and will take steps to address it in a timely manner. Conversely, if you believe the notice to be in error, you should also fill out this form accordingly and submit it to the agency as soon as possible. There is a three-month response period after the notice is issued that gives recipients time to work with the agency and figure out a solution. This allows you to take the time you need to work with your accountant or attorney.
File a Petition
If you are unable to come to an agreement about the notice with the IRS, you can file a petition with the US Tax Court as a last resort. The original notice lists a cut-off date for starting such a petition, so it’s important to act without delay if you intend to file one. It’s possible to file a petition even while working on a compromise solution, so it’s something you should consider if you disagree with the notice. Filing in this manner will ensure that you meet the appropriate deadlines so, if the compromise doesn’t work out, you have a backup plan.
People aren’t perfect, which means tax mistakes happen. The IRS knows that and usually gives taxpayers ample opportunity to respond to notices. Even though it’s tempting to put stuff like this off until another day, it’s always better to act promptly. Read your notice and respond accordingly so you can take the load off your shoulders and move on with life.
