IRS Notice of Deficiency (90-Day Letter): Your Last Chance Before Tax Court

The Notice of Deficiency (also called a Statutory Notice of Deficiency, or SNOD) is the formal IRS notification that it has determined you owe additional tax. The IRS issues it after an audit or CP2000 underreporter process when you have disagreed with or not responded to the proposed assessment. The notice is issued by certified mail.

From the date of the notice, you have 90 days (150 days if addressed to a person outside the US) to petition the Tax Court for a redetermination. This is a hard, statutory deadline — missing it allows the IRS to assess and collect the tax without Tax Court review. The 90 days is measured from the mailing date, not the date you receive it.

You have three options: (1) Petition the US Tax Court — no payment required, dispute is heard before a judge; (2) Pay the tax and file a claim for refund, then sue in US District Court or Court of Federal Claims; or (3) Accept the IRS's determination and do nothing (the tax is assessed after 90 days). Most taxpayers who disagree choose Tax Court because payment is not required.

Even if you do not plan to petition Tax Court, the IRS Office of Appeals may still be available. If you have not had an Appeals conference, requesting one within the 90-day window can sometimes result in a settlement without litigation. Contact a tax professional immediately upon receipt — 90 days sounds like a lot of time but preparing a Tax Court petition and evaluating options takes time.

After 90 days without a Tax Court petition, the IRS assesses the tax and begins the collection process (CP14 through levy). Your only recourse to dispute without payment is gone. You must pay first, then sue for a refund — a much more expensive and difficult path.