If you have received an IRS Notice of Deficiency, also known as CP 531 or Letter 531, then you need to act quickly or you'll lose rights. Ignoring this notice will also start the IRS collections process. Liens, Levies, and other harm to your finances could start pretty quickly after this notice is issued. It is important to know your rights and exercise them.
I am a tax attorney in Minneapolis, Minnesota. I represent taxpayers before the IRS and state tax authorities all over the country. I help with tax debts, tax audits, payroll tax issues, and criminal tax matters. The most important right that you will lose by ignoring the Notice of Deficiency from the IRS is the right to file a petition in the United States Tax Court.
Once the deadline on the Notice of Deficiency passes, this is a 90 day notice by statute, then the United States Tax Court will not hear your petition. If you need to go to court to fight the tax debt, the United States Tax Court is the cheapest method. The other types of Federal Courts typically require you to pay the debt first, request a refund, and then go to court when the refund is denied.
If you have not been to IRS Appeals, then filing the petition with the United States Tax Court will automatically put you in the appeals process. The IRS and the Department of Justice will then work with you to come to a deal or resolve the issue. Tax Court can be time consuming and costly for the government too. Your case might also move faster through appeals since there are now Tax Court deadlines to meet too.
If you don't file a petition in tax court, the IRS will start to send you billing notices and eventually the IRS could file a Notice of Federal Tax Lien or levy your assets. It is important that you consult with a tax attorney once you receive this notice so that you can know your rights and get help with the United States Tax Court petition if you choose to file one.
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