IRS Notice of Deficiency
90 Days to Act. The Clock Is Ticking.

The IRS Notice of Deficiency Is the Most Deadline-Critical Document in Tax Law

A Notice of Deficiency — commonly called a "90-day letter" — is a formal legal document the IRS sends via certified mail when it proposes to assess additional tax against you. It is the culmination of an examination or audit process, and it gives you a specific legal right: the ability to petition the United States Tax Court to dispute the proposed assessment before paying a single dollar.

This right is absolute, but it is time-limited. You have exactly 90 days from the date the notice is mailed (150 days if you are outside the United States) to file a petition with the Tax Court. If you miss this deadline by even one day, you lose the right to challenge the IRS in Tax Court without first paying the tax. There are almost no exceptions to this deadline.

In our practice, the 90-day letter is the most time-sensitive document in tax law. Miss the 90-day window and you lose your right to petition Tax Court — your only pre-payment judicial review option. We have had clients come to us on day 88. Two days made the difference between a $200,000 assessment becoming final and getting the case into Tax Court where we ultimately negotiated an 80% reduction.

What the Notice of Deficiency Contains

The Notice of Deficiency identifies the tax year or years at issue, the amount of additional tax the IRS proposes, and the specific adjustments the IRS made to your return. It also includes a "statutory notice" cover page explaining your right to petition the Tax Court. The IRS is required to send this notice to your last known address, which is typically the address on your most recently filed return or the address you provided in a Form 8822.

Common situations that trigger a Notice of Deficiency include: unreported income identified through information matching, disallowed deductions or credits from an audit, changes from an IRS examination that you did not agree to, adjustments from a partnership or S corporation audit that flow through to your individual return, and proposed penalties assessed in connection with an examination.

We have found that many Notices of Deficiency contain errors — incorrect income amounts, disallowed deductions the taxpayer can substantiate, or computational mistakes. The IRS is not infallible. A careful line-by-line review of the notice against the taxpayer's actual records frequently reveals adjustable items. In roughly half the cases we handle, we identify at least one IRS error that reduces the proposed assessment.

Why the 90-Day Deadline Is So Critical

The 90-day deadline is a jurisdictional requirement. The Tax Court literally does not have the authority to hear your case if the petition is filed one day late. This is not a procedural technicality that can be waived — it is a hard jurisdictional bar. Courts have consistently held that late-filed petitions must be dismissed, regardless of the reason for the delay.

If you miss the deadline, your only option to challenge the assessment is to pay the tax in full (or at least the portion at issue), file a claim for refund, wait for the IRS to deny it, and then sue in the United States District Court or the Court of Federal Claims. This is called the "pay first, litigate later" path, and it is far more expensive and difficult than Tax Court litigation.

How We Handle Notices of Deficiency

When you receive a Notice of Deficiency, time is of the essence. At Brotman Law, we immediately review the notice and the underlying examination workpapers, evaluate the merits of each IRS adjustment, and determine whether to petition the Tax Court or pursue other resolution options. In many cases, we can negotiate a settlement with IRS counsel after the petition is filed, achieving a better result than accepting the proposed assessment. In other cases, we prepare the case for trial before a Tax Court judge.

What most attorneys do not tell you: even after you petition Tax Court, the IRS Appeals office will contact you to try to settle before trial. In our experience, the vast majority of docketed cases settle at the Appeals level. Filing the petition is often the strategic move that forces the IRS to negotiate seriously — once the case is docketed, the IRS faces the cost and uncertainty of litigation, and their settlement posture shifts dramatically in the taxpayer's favor.