Accountant or Attorney? The IRS 90-Day Letter

In a perfect world, the tax law would be clear, easy to comply with, and most everyone would timely file any required returns. Those returns would, of course, all be accepted as filed. End of story. But, as we know, our world is not perfect. Whether it’s the fault of the taxpayer, the preparer, the IRS, or Congress, mistakes, misunderstandings and disagreements occur. The IRS audits income and estate tax returns to ensure and to promote compliance (as it—the IRS—interprets the law). In most cases, any disagreements are resolved during the examination, or during the protest of any proposed adjustments (see Article Accountant or Attorney? The IRS 30-Day Letter). At some point, however, if the IRS thinks additional taxes are due and no further arguments are to be entertained, the law generally requires that before any additional tax can be assessed, an official notice of the IRS determination of a deficiency must be mailed to the taxpayer by certified or registered mail. The IRS “90-Day Letter” is an official statutory Notice of Deficiency on a taxpayer’s tax return.

The IRS 30-Day Letter and Appeals

Accountant or Attorney? The IRS 30-Day Letter and Appeals

Following a Federal income tax audit in which changes are proposed but not accepted by the taxpayer, the IRS agent examining will generally send a letter with a computation and a Revenue Agent’s Report (RAR) outlining the proposed changes (an exception to this procedure applies when there is insufficient time remaining on the statute of limitations, in which case a 90-day letter may be issued by the IRS. See below). The letter outlines the taxpayers’ options if they do not agree with the changes, which options include the right to protest/appeal the proposed adjustments within thirty days. Because of the 30-day time period in which to appeal the proposed adjustments, the letter is commonly referred to as a “30-day letter.” Upon receipt of the 30-day latter, a taxpayer has a few options:

Should We File Married Filing Jointly?

Are You Sure You Want to File MFJ?

When a couple says “I do” they begin to share everything, from the household bills to cramped bathroom space. But is this always a good idea when it comes to filing taxes? Most of the time, married couples immediately begin filing jointly and don’t give the matter a second thought because it generally means lower tax bills. However, in certain cases couples and their tax advisors should take a closer look at their circumstances to determine if this really is the best option for them, or if it could actually create problems. Whether preparing your own return or the returns of others, sometimes it makes sense to look beyond the obvious and plan for that certain or potential liability.