A Statutory Notice of Deficiency (SNOD) isn’t something that most taxpayers want to receive from the IRS. Such a notice shouldn’t come as a complete surprise unless a person has relocated or been away from home for some time. The IRS only sends a SNOD after sending other notices informing someone that they owe back taxes.
The notice lists the amount of tax owed, the applicable tax year(s) and any interest or penalties owed. It should be easy to recognize the notice because it will be sent via certified mail.
Why it’s also called a 90-day letter
A SNOD is also known as a 90-day letter because it gives the taxpayer 90 days to file a petition with the United States Tax Court in Washington, D.C. if they don’t agree with the information provided in the notice. During that 90-day period, the IRS won’t begin collection actions.
Once that 90-day period is over, if a taxpayer hasn’t petitioned the Tax Court or contacted the Taxpayer Advocate Office (which can help if a taxpayer has already been trying to resolve their tax issue without success), the IRS is allowed to start collection efforts. This can include tax liens and levies, as well as wage garnishments.
If a taxpayer files a petition, the Tax Court will refer the case to the IRS Office of Appeals. It may be possible to work out the matter there rather than having to go to court.
It’s important to understand that a SNOD is the last chance for a taxpayer to either pay the amount the IRS says they owe or use one of the options provided to either dispute the deficiency or work out a reduction in the amount owed.
This notice should never be ignored
What no taxpayer should do is assume that if they ignore the notice (whether they believe it’s accurate or not), the matter will get lost in the bureaucracy. Many taxpayers would be surprised to learn how much is done automatically at the IRS.
It is important to seek legal guidance if you receive a SNOD or another notification that you have a tax deficiency. This can help protect your rights and resolve the matter as smoothly as possible.