Updated June 2025
The Internal Revenue Service (IRS) must send you a Notice of Deficiency before imposing income tax or other taxes against you. Typically, this happens if you under-reported the tax on your return or didn’t file. The IRS may discover the tax deficiency by reviewing third-party information, such as information submitted by employers or banks, or by auditing your tax return.
Once you receive this notice, you have 90 days to respond (150 days if the notice was sent out of the country), or the IRS will assess tax against you. Then, they will add interest and penalties and pursue involuntary collections if you don’t pay. To get help with a deficiency notice, contact us at Wiggam Law today.
Key takeaways
- What is a deficiency notice? The IRS sends deficiency notices before assessing tax against you.
- Why is the IRS assessing tax? In cases where you didn’t file a return, or they adjusted your return due to an audit.
- Deadline – You have 90 days to respond, or 150 days if the notice was sent out of the country.
- Consequences – If you don’t respond, the IRS will assess the tax against you.
- Options – You can appeal by the deadline on the letter if you disagree, or make payment arrangements if you agree.
What is an IRS Notice of Deficiency?
Also called a 90-day letter, the Notice of Deficiency is a letter that the IRS sends to taxpayers who have a tax deficiency. The notice says that the IRS has proposed a tax assessment against you, and if you disagree, you have the right to protest in Tax Court.
The deficiency may be related to income that wasn’t reported on a tax return or a tax return that wasn’t filed. The IRS gives taxpayers 90 days to respond to this notice, and if they don’t respond, the IRS will move forward with assessing the tax.
Options right now
Right now, you have 90 days to file a petition in the United States Tax Court to dispute the proposed tax assessment. During the tax court litigation, you explain why the assessment is incorrect, and, in many cases, have an independent appeals representative review your case for settlement instead of going to trial. It’s helpful to have a tax attorney represent you during this process.
What if you don’t respond
If you don’t respond, the deficiency will be assessed against you. At that point, you will no longer have the right to dispute the tax debt. Instead, you will be stuck paying it, whether you agree or disagree with the assessment.
The IRS typically sends notices 3219A or 3219N for taxpayer deficiencies.
What is IRS Notice 3219A?
The 3219A is a Notice of Deficiency related to changes/adjustments on your tax return. Before sending this notice, the IRS usually sends a CP2000 letter, an audit determination notice, or a similar notice. Then, if you don’t respond, the agency sends the deficiency notice. You have 90 days to respond, or the IRS will assess the tax against you and start the collection process.
What did the IRS adjust in my tax return?
The most common reasons that people receive the 3219A notice of deficiency are:
- Mistakes on tax returns – for instance, a math error on a hand-prepared return.
- Unreported income – for instance, forgetting to report income from a 1099 form.
- Disallowed deductions or credits – for example, the IRS disallowed a claim for an education tax credit because the filer didn’t meet the rules to claim it.
- Unreported stock sales or crypto transactions – If the IRS has info about investment transactions that you haven’t reported on your return, they will adjust it.
What is IRS Notice 3219N?
The 3219N is a deficiency notice sent by the IRS if you have unfiled tax returns. If you don’t respond within 90 days, the agency will assess the tax against you, which they calculated using wages and other income reported by third parties. Then, they will start the collection process. You can respond by disputing the notice, paying the tax deficiency, writing a letter explaining why you didn’t need to file, or filing a correct tax return.
Why did I receive a CP3219N?
Generally, people receive this deficiency notice because they didn’t file a tax return. So, the IRS used the details they had to generate a substitute for return. The CP3219N shows the tax as calculated on the substitute return.
How to Respond to the Notice of Deficiency
If you receive a notice of deficiency, you should:
- If you agree with the assessment, sign and return Form 5564 (Notice of Deficiency-Waiver). Then, pay in full or make arrangements to pay the tax debt. You can also not respond, and the IRS will assess it after the 90-day period to file a petition has expired.
- If you disagree, contact the IRS. They will review any additional information you have about the assessment. If you can’t come to a resolution with the IRS, petition the Tax Court, but remember, you only have until the 90-day deadline.
How to pay the tax from a deficiency notice when you agree with the assessment
If you cannot pay the tax assessment in full, here are the main options to consider:
- Installment agreement – Make monthly payments on your tax debt. Automatic approval if you owe less than $50,000, can pay off the balance in six years, and are up-to-date on tax return filing and payments. Otherwise, you can still get approved, but you may need to provide details about your finances.
- Offer in compromise – If your tax debt exceeds the equity in your assets and your disposable income, you may qualify for a settlement. You must share detailed financial information when applying.
- Penalty abatement – You may qualify for penalty relief if you haven’t had penalties in the last few years, or if you had reasonable cause for incurring the penalties.
If you prove that you cannot afford to pay anything, the IRS will mark your account as currently noncollectible and pause collections against you.
How to dispute the deficiency notice when you disagree with the assessment
If you disagree with the proposed assessment, contact the IRS directly. Send the agency any information you have that proves the proposed assessment is incorrect. If the IRS was given incorrect information by a third party (for example, if a client filed a 1099 form with the wrong numbers), ask that payer to file a new form with the IRS.
While working with the IRS to resolve the issue, keep an eye on the deadline. If you decide to appeal, you only have until the 90-day deadline. If you miss that date, you cannot appeal in Tax Court.
How to protest a deficiency notice in U.S. Tax Court
If you disagree with the additional tax and wish to oppose it, you can submit a petition for redetermination in Tax Court. When you file a petition, the IRS cannot take any collection action until the court decides on the case.
You must submit your petition within the 90-day period. To do so, you can file a paper petition by mail or in person, or use the Court’s DAWSON system to file an electronic petition.
How to ask for a rescission of the deficiency notice
You can also ask the IRS to rescind the deficiency notice. This is sometimes referred to as a withdrawal of the notice. You also have just 90 days to make this request. The IRS reviews rescission requests on a case-by-case basis, and approval tends to be rare.
The IRS may rescind your notice of deficiency if it was issued incorrectly, in the wrong amount, to the wrong taxpayer, or with other issues. If the IRS agrees to rescind the notice of deficiency, there is a risk that they may issue another notice showing a higher amount of tax due. Consider talking with a tax professional before taking this route.
When to request an audit reconsideration to respond to a notice of deficiency
If the deficiency notice comes to you after an audit, you may be able to rectify the issue by filing an audit reconsideration. Here are some situations where you may want to ask for audit reconsideration:
- You disagree with the amount of tax the IRS claims you owe.
- You have new information that you didn’t have during the audit.
- You didn’t participate in the audit — for example, because you didn’t receive the audit notice due to moving.
Unfortunately, you cannot request an audit reconsideration if you signed an agreement to pay the tax or the Tax Court has already determined that you owe the tax.
How a Tax Attorney Can Help You
Tax attorneys provide assistance tailored to your unique situation. After you receive a notice of deficiency, they may help with the following:
- Dispute the tax due by negotiating with the IRS.
- Help you file a petition in Tax Court and then represent you through the legal process.
- File Form 5564 to show you agree with the assessment.
- Guide you toward the best IRS payment plan or settlement for your financial situation.
- Apply for penalty abatement on your behalf.
FAQs About Notices of Deficiency
What Does a Notice of Deficiency Mean?
The IRS sends this notice to people who have a tax deficiency, meaning the agency is proposing a change to your tax return. This happens when you don’t report all of your income or you don’t file a tax return. Generally, the IRS discovers the deficiency due to an audit or by reviewing income documents submitted by others in your name.
What is IRS Form 5564?
The IRS sends Form 5564 (Notice of Deficiency-Waiver) with Notices of Deficiency. If you agree with the info on your deficiency notice, you can sign and return it. Then, you can either pay the tax liability in full or contact the IRS to make other arrangements.
How Do You Fill Out Form 5564?
Form 5564 includes the following details:
- Your personal and contact information.
- Your tax information, including the kind of tax, tax year, and the amount of deficiency.
- Your signature and your spouse’s signature if a joint return was filed.
Now that you’ve completed and signed the form, it’s time to return it to the IRS to the address at the top of your deficiency notice. Note that your consent on this form does not exclude you from filing a refund claim (after you have paid the tax) if you later believe you are entitled to one.
Is a Deficiency Notice a Bill?
No, an IRS Notice of Deficiency is not an assessed tax. However, it can quickly turn into a bill. To prevent this tax deficiency from becoming a tax assessment, you need to petition the United States Tax Court or request the IRS to rescind the notice within 90 days.
Should I Amend My Tax Return After Receiving a Notice of Deficiency?
Generally, you don’t need to amend your tax return if you receive a deficiency notice. However, if you want to make additional changes to your tax return that are not addressed by the notice, you may need to file an amended return.
Can I Get an Extension to Respond?
No. Generally, there are no extensions to this deadline. If you request help directly from an IRS employee or if you request the IRS to rescind the notice, the 90-day clock is still ticking. Taking these actions doesn’t prolong the time you must file a petition in the U.S. Tax Court.
If I Disagree, Do I Need to File a Petition with the U.S. Tax Court?
No, if you disagree, you are not required to file a petition with the U.S. Tax Court. First, reach out to the agent or officer listed at the top of the notice. If you contact the IRS directly, you may be able to resolve the issue without going to court.
Alternatively, consider asking for a withdrawal of the notice or talk to an attorney about paying under protest. In some cases, the Tax Court is the best option; in other situations, other options are faster and more efficient.
Contact Wiggam Law for Help Today
If you are concerned about a Notice of Deficiency, Form 5564, or any other tax problems, contact the experienced tax attorneys at Wiggam Law. Call us today at (404) 233-9800 or complete our online form for a consultation.