How Do I Respond to an IRS Deficiency Notice? Smart Steps to Take Now
Receiving an IRS notice isn’t anyone’s idea of fun, especially when it’s something as serious as a Notice of Deficiency. If you’ve received a letter from the Internal Revenue Service (IRS) saying you owe more taxes, take a deep breath. You're not alone, and there are steps you can take to respond calmly and correctly.
In this guide, we'll walk you through how to handle an IRS deficiency notice, what it means, and what to do next, all presented clearly and in plain English.
What Is a Notice of Deficiency?
An IRS Notice of Deficiency is a formal letter from the IRS stating they’ve completed an audit or review of your tax return and found that you owe additional tax, interest, or penalty. This notice is often called a 90-day letter because you typically have 90 days from the date of your notice to respond.
The IRS sends this notice when they believe there’s a tax deficiency – a difference between what you reported on your tax return and what they think you should have reported.
Why Did I Receive an IRS Notice?
You may receive an IRS deficiency notice due to:
A recent IRS audit or income tax audit
Unreported Form 1099 income
Claiming incorrect tax deductions
Errors in Social Security numbers or mismatched wage reports
Failing to file or incorrectly filing income from employment or self-employment
Issues raised during the IRS tax examination process
One common version of this letter is the Notice CP3219A, sometimes called Letter 3219. This is issued when the IRS completes an examination or doesn’t receive your tax return.
Here’s more info from the IRS about the CP3219A Notice explanation.
What Does the Notice of Deficiency Include?
The notice outlines:
The amount of tax the IRS says you owe
Reasons for the proposed changes
How to respond to the IRS notice
Your right to challenge the IRS action in Tax Court
This letter that the IRS sends is legally required before they can collect the proposed tax.
That's why it's called a Statutory Notice of Deficiency or simply a Deficiency Notice.
Once the IRS issues a notice of deficiency, it cannot assess the balance unless you either:
Don’t respond within 90 days, or
File a petition with the United States Tax Court, and the court resolves the matter
How to Respond to a Notice of Deficiency
When you receive a notice of deficiency in Denver, Colorado, here’s how to handle an IRS situation like this without panic.
Step 1: Read the Entire Notice Carefully
Start by reviewing every section of the notice. Look for:
The date of your notice (you’ll need this to count your 90 days)
The tax year affected
Details about the proposed deficiency
Documents or records that may have triggered the review
Step 2: Decide If You Agree or Disagree
Once you understand the notice, ask yourself:
Do I agree with the amount I owe?
Did I make a mistake on my original return?
Have I already paid this?
If You Agree …
You have two options:
Sign and return Form 5564, the Notice of Deficiency-Waiver
Pay the amount you owe directly to avoid interest and penalties
If You Disagree …
If you believe the IRS is wrong, you have the right to disagree with the IRS and present your case.
File a Petition with the Tax Court
If you still disagree after reading the notice, you must file a petition with the U.S. Tax Court. This is how you protect your rights.
Filing Timeline Matters
You typically have 90 days from the date on the notice to file
If the notice was sent while you were outside the U.S., you may have up to 150 days
Failing to respond within the deadline means the IRS will assess the tax, and you lose your chance to dispute it in court.
What You’ll Need to File
A formal tax court petition
A copy of the notice
Any supporting documents
An explanation of why you disagree
Visit the official Tax Court website to start your petition. There is a petition form and detailed instructions for taxpayers.
Filing Tip
Even if your issue seems minor, known as a small tax dispute, the Tax Court has a small case procedure to streamline hearings for under $50,000.
IRS and TAS: Help You Can Use
Tax issues can get tricky. If you're stuck or overwhelmed:
Call the IRS directly to ask for clarification or an extension
Contact the Taxpayer Advocate Service (TAS) if you face financial hardship or delays
Ask the IRS to refer your case to the IRS Office of Appeals
Both the IRS and TAS are there to ensure your rights as a taxpayer are protected.
What Happens if You Ignore the Notice?
If you don’t respond to the notice of deficiency, here’s what may happen:
The IRS will send a statutory notice of balance due
You may be subject to penalties, interest, and debt collection
They could place a lien or initiate wage garnishment through your employment
Your Social Security (United States) benefits may even be affected if you owe back taxes for an extended time.
That’s why it’s crucial to act, even if you disagree or don’t fully understand the letter.
Working With a Tax Professional in Denver
While you can respond to a deficiency notice on your own, complex tax issues often require experienced help. Tax professionals can:
Review your IRS letter
Help respond to IRS notices
Represent you in dealings with the IRS or Tax Court
Prepare or amend your tax returns in the United States
Assist with alternative resolutions, like an Offer in Compromise
If you’d like to resolve your IRS problem with professional guidance from someone who knows Denver tax rules, consider working with a trusted tax accountant in Denver.
Tips to Avoid Future IRS Notices
To prevent future notices:
Double-check income and wage entries
Match your Form 1099s and W-2s to what’s reported
Use secure Social Security number identification
Don’t rush through your return; many notices come from simple reporting errors
Keep a copy of your original tax return and all supporting documents
You can also request your IRS transcript to spot mistakes or mismatches before they become bigger issues.
Conclusion: Respond Smartly, Not Hastily
If you’ve received a Notice of Deficiency, remember: it’s not a final bill. It’s your legal taxpayer’s notice that the IRS believes you owe more. You've got options, and you’ve got rights.
Whether you choose to sign and return Form 5564, send the IRS a letter, or petition the Tax Court, what matters most is that you respond to the IRS notice within that 90-day window.
Take the time to read, understand, and react appropriately.
Need professional guidance to handle an IRS deficiency issue or navigate a complex tax audit? Reach out to a local expert who understands the IRS, Denver tax laws, and your rights as a taxpayer.
We’re here to help you make smart, informed decisions. Don’t wait, take action today.
