IRS Notice of Deficiency — What to Do With Your 90-Day Letter
The 90-day clock is a hard deadline. Missing it eliminates your ability to dispute in Tax Court without paying first.
An IRS Notice of Deficiency (also called a 90-day letter or statutory notice of deficiency) is the IRS’s formal proposed assessment of additional tax. You have 90 days from the notice date to file a Tax Court petition — without paying the disputed amount first. After 90 days, the IRS can assess and collect the deficiency.
What the 90-Day Clock Actually Means
The 90-day period begins from the date printed on the notice — not the date you received it. If you were traveling, the mail was delayed, or the notice sat unopened, the clock was still running. If you’re outside the United States when the notice is issued, you have 150 days.
Filing a Tax Court petition stops the IRS from assessing or collecting the disputed amount while the petition is pending. This is its primary value — it gives you time to negotiate at the IRS Office of Appeals, where the vast majority of Tax Court cases settle before trial.
Missing the deadline eliminates this option. The IRS assesses the deficiency and it becomes a balance due. At that point, your options shift from dispute to resolution or a more expensive path to refund litigation.
Tax Court vs. Paying and Filing a Refund Claim
Path 1: Petition Tax Court within 90 days. Dispute the proposed assessment without paying first. The case goes to the IRS Office of Appeals for settlement negotiations. Most cases resolve there; only a small fraction go to trial. This is generally the preferred path when the disputed amount is substantial.
Path 2: Pay, then file a refund claim. Pay the assessed amount, then file a refund claim and litigate in federal district court or the Court of Federal Claims. This requires paying first — a significant barrier when the amount is large. It may be appropriate when the amount is small or when the legal theory is better suited to a different forum. See our tax litigation page for how we evaluate forum selection.
What Happens If You Miss the Deadline
The IRS assesses the deficiency and adds it to your account balance. Interest and penalties begin accruing from the original due date of the return. You can still dispute by paying and filing a refund claim. You can also attempt to resolve the balance through collections — installment agreement, OIC, hardship status — but these approaches don’t dispute the liability itself.
The practical reality: options narrow significantly after the 90-day deadline. The notice is designed to be a hard deadline, and it is one.
What to Do Immediately
- 1.Note the date on the notice and count 90 days forward. Add that deadline to your calendar today.
- 2.Contact a tax attorney. The 90-day window seems long; it moves quickly once you factor in gathering records, evaluating the merits, and preparing a petition.
- 3.Do not ignore the notice.
- 4.Do not simply pay the proposed amount hoping it resolves the problem. Paying may waive your ability to dispute the liability in certain circumstances, and it doesn’t address the underlying issue if the position is wrong.
For context on how we handle examinations that lead to a Notice of Deficiency, see our IRS audit defense and IRS appeals pages.
Frequently Asked Questions
What is a Tax Court petition?
A Tax Court petition is the document you file with the United States Tax Court to dispute a Notice of Deficiency without paying the proposed amount first. It must be filed within 90 days of the notice date (150 days if you’re outside the US). Once filed, the IRS cannot assess or collect the disputed amount while the case is pending. Most Tax Court cases settle at the Appeals level before trial.
Can I appeal before receiving a Notice of Deficiency?
Yes. During an IRS examination, you have the right to request a conference with the IRS Office of Appeals before a Notice of Deficiency is issued. This is the preferred path — resolving the dispute at appeals before the 90-day letter is issued means you avoid the Tax Court deadline entirely. See our IRS appeals page for how that process works.
What if I already missed the 90-day deadline?
Your Tax Court option is gone, but you’re not out of options. You can pay the assessed amount and file a refund claim in federal district court or the Court of Federal Claims. You can also attempt to resolve the balance through installment agreements, an Offer in Compromise, or hardship status — these don’t dispute the liability, but they address how it’s collected.
Questions about your specific situation?
Book a free 15-minute call. We’ll tell you whether you need an attorney, a CPA, or both.