What does the IRS Notice of Deficiency mean? Just that. You amount you paid was deficient, and now you have to pay more!
If you're sure you don't owe, get the facts and see what you can do to contest this notice:
Timing is Everything
Your Notice of Deficiency outlines a 90-day deadline for taking care of the proposed amount owed. You have to resolve your issue in this time or the IRS may hit you with IRS Levies and Liens!
Check for Mistakes
Even the mighty IRS machine is fallible. Granted, it's an efficient machine, mistakes can happen! Contact the IRS if the Notice of Deficiency was sent to the wrong address.
Court Time
The IRS Notice of Deficiency provides instructions for filing a petition with the tax court if you're positive you don't owe. Use Form 12203, "Request for Appeals Review."
Reality Check: I have to be real here, your chances of winning a case against the IRS without professional help is next to nonexistent. You'll want to gather substantial documentation to prove your point and work with a professional to win against the IRS beast!