Tax Dictionary – Statutory Notice of Deficiency

IRS Definition

A notice of deficiency, also called a statutory notice of deficiency or 90-day letter, is a legal notice in which the IRS Commissioner determines the taxpayer’s tax deficiency. Tax laws require that the IRS issue a notice of deficiency before assessing additional income tax, estate tax, gift tax and certain excise taxes unless the taxpayer agrees to the additional assessment. The notice of deficiency is a legal determination that is presumptively correct and consists of the following:

  1. A letter explaining the purpose of the notice, the amount of the deficiency, and the taxpayer’s options
  2. A waiver to allow the taxpayer to agree to the additional tax liability
  3. A statement showing how the deficiency was computed
  4. An explanation of the adjustments

More from H&R Block

If you get a statutory notice of deficiency, you have 90 days to file a petition with the U.S. Tax Court to appeal taxes the IRS thinks you owe. You would receive this letter if you didn’t respond to a previous letter allowing you 30 days to appeal within the IRS, or if your appeal was unsuccessful.

If you don’t file a petition with the Tax Court by the deadline shown on the statutory notice of deficiency, the IRS will send you a bill for the tax, penalties, and interest shown on the notice.

Learn what to do if you receive a deficiency notice and can’t pay your taxes.

Related Topics

Related Resources

IRS Notice CP177 – Intent to Seize Your Assets and Notice of Your Right to a Hearing

Learn more about notice CP177 and how to handle an IRS tax bill for your business with help from the tax experts at H&R Block.

IRS Letter 3502C – Failure to Deposit Penalty Abatement

Learn more about letter 3502C and learn how to address an IRS failure to deposit penalty with help from the experts at H&R Block.

Tax Dictionary – IRS Wage and Income Transcript

Get the facts from H&R Block about what appears on IRS wage and income transcripts, why you might want to request them, and how to get them from the IRS.

Tax Dictionary – Failure to File Penalty

Get the facts about the IRS failure to file penalty, which the IRS charges when you don't file your return on time. Good news: You may have relief options.