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Simple English definitions for legal terms
deficiency notice
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A quick definition of deficiency notice:
A deficiency notice is a letter sent by the IRS to a taxpayer informing them that they owe more taxes than they have paid. The taxpayer has 90 days to either pay the taxes or challenge the deficiency in tax court. If they do not take action within this time frame, the IRS can take legal action to collect the owed taxes. This notice is also known as a 90-day letter or notice of deficiency.
A more thorough explanation:
A deficiency notice, also known as a ninety-day letter, is a legal notice sent by the Internal Revenue Service (IRS) to a taxpayer informing them of a tax deficiency. This means that the IRS has determined that the taxpayer owes more taxes than they have paid. The notice gives the taxpayer 90 days to either pay the taxes owed or challenge the deficiency in tax court.
For example, if a taxpayer files their tax return and the IRS determines that they owe an additional $5,000 in taxes, the IRS will send a deficiency notice to the taxpayer. The taxpayer then has 90 days to either pay the $5,000 or challenge the deficiency in tax court.
It is important for taxpayers to respond to a deficiency notice within the 90-day period, as failure to do so can result in the IRS taking collection actions, such as garnishing wages or seizing assets.