IRS Notice of Deficiency: What it Means & Protecting Your Cash

It doesn't make sense! You paid your taxes by the deadline, yet the IRS still delivered a Notice of Deficiency! Why did the IRS send it when you were a responsible citizen, doing the right thing and paying your taxes? Unfortunately, this notice means the IRS wants you to pay even more! If you know you don't owe, get the facts and learn your options for contesting this notice:
Watch that Deadline: Your timing is critical. Make sure you pay or resolve the issue within the 90-day deadline if you don't want to face IRS collection actions.

You can call the IRS, but they're not going to extend your deadline. So what should you do next?

Know the Loopholes: The IRS makes mistakes. Sure, those mistakes are rare, but as a former IRS Agent, I know they do happen! Sometimes your Notice of Deficiency is sent to the wrong address. If this is proven, Tax Court will dismiss the case. But if they feel you owe, they will issue another Notice of Deficiency, so be prepared!

Take it to Tax Court: You can take them to court if you know you don't owe. The IRS Notice of Deficiency gives you instructions for filing a petition with the tax court (this is Form 12203 "Request for Appeals Review").

The court may schedule a case for a trial. Use the time before the court date to round up documents which prove you do not owe the IRS. 

Let's be real here. It's going to be nearly impossible to win a case against the IRS. Gather substantial evidence, and armor up and hire help for the battle!