What this letter is about
This Statutory Notice of Deficiency notifies you of our intent to assess a tax deficiency and of your right to petition the U.S. Tax Court to dispute the proposed adjustments. We made these adjustments because we received information from third parties that doesn’t match the information you reported on your return.
What you need to do
- Review this notice and compare our changes to the information on your tax return. The amounts shown as due on the notice may not match your previous notice because you cannot challenge all items in tax court.
- If you agree with the changes, complete Form 4089, Notice of Deficiency - Waiver, sign, and return it in order to limit additional interest charges. If you don't send a payment with Form 4089, we’ll send a bill for the amount due with any interest and applicable penalties.
- If you don’t agree with the changes and have additional information, immediately mail it to us at the address listed on the notice. Attach this notice to your correspondence to help us identify your case. Keep a copy for your records. This won’t extend your deadline to file a petition with the U.S. Tax Court.
- In addition, if you don’t agree with the changes, you have the right to challenge the increase in tax by filing a petition with the U.S. Tax Court no later than the date listed on the notice. The Court can’t consider your case if you file the petition late. You can download a petition form and rules from www.ustaxcourt.gov or contact:
Clerk of the U.S. Tax Court
400 Second Street, NW
Washington, DC 20217
You may want to
- Send us the name, address, and taxpayer identification number of the other party that received the income if it isn't yours.
- Notify the payers to correct their records to show the name and taxpayer identification number of the person or business who actually received the income, so that future reports to us are accurate.
- Make sure your other returns don’t have the same mistake.
- Contact us if you have questions.
- Keep a copy of the notice for your records.
Frequently asked questions
No. It shows how the information we received affects your tax. It also gives you contact information for filing a petition with the Tax Court.
If you want us to consider additional information, you must contact us immediately.
If you have a simple response, such as directing us to a specific line on your original return where you reported the income, you can call the toll-free number listed on the notice.
We may require a written response if the issue is more involved, especially if you disagree with some of the proposed changes. You may want to mail copies of payer information documents such as Forms 1099 or Schedules K-1. Include any other letters or documents that support your position. You should submit a written statement to explain any unusual tax situations.
If you choose to petition the U.S. Tax Court, you must submit the application in writing.
Tax years generally end on Dec. 31, but we don't receive information from banks, businesses, and other payers until much later. Once we receive all the tax returns and payer information, we compare the information you reported with the information third party payers provided to us. It can take 8 months or more to complete this review.
No. The time you have to petition the U.S. Tax Court can't be extended. It’s important you respond to the Statutory Notice of Deficiency or petition the Tax Court (if you choose to) by the due date shown on the notice. If you don’t, we’ll assume the proposed changes are correct and assess the additional deficiency.
The law requires us to charge interest on any tax that isn't paid by the return due date (Internal Revenue Code Section 6601).
The law doesn't permit us to reduce or remove interest for reasonable cause. However, in limited circumstances, we may waive penalties. If you think you qualify for penalty removal, you should include related information in your response.
• Keep accurate information from banks and other payers to verify you received all payment information for filing your return. Review the documents to be sure they show your most current address. Report specific income types on the correct lines on Form 1120, U.S. Corporation Income Tax Return (PDF), or Form 1041, U.S. Income Tax Return for Estates and Trusts (PDF). For more information, see the reporting instructions for the form you’re required to file.
• If you report income on a line not traditionally reserved for that type of income, provide a statement indicating where you reported the income.
• Always attach a statement identifying the source of the amount reported on Form 1120, line 10, or Form 1041, line 8 (Other Income).
• Attach a statement explaining your percentage of gross proceeds that you would be liable to claim on your tax return.
• Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts applicable to each.
- Publication 542, Corporations (PDF)
- Publication 1035, Extending the Tax Assessment Period (PDF)
- Publication 5181, Tax Return Reviews by Mail CP 2000, Letter 2030, CP 2501, Letter 2531 (PDF)
- Form 433-D, Installment Agreement (PDF)
- Form 4506, Request for Copy of Tax Return (PDF)
- Instructions for Form 1041, U.S. Income Tax Return for Estates and Trusts (PDF)
- Instructions for Form 1120, U.S. Corporation Income Tax Return (PDF)