When Can Taxpayers Face Premature Tax Assessment by the IRS?

 Posted on February 09, 2021 in Tax Appeals

Many taxpayers are understandably concerned when they receive a notification from the IRS stating that they owe taxes. If a taxpayer does not respond to a Statutory Notice of Deficiency, the IRS may perform a tax assessment and take action to collect the amount owed. A taxpayer may appeal the tax deficiency by filing a petition in Tax Court, but in some cases, a petition may not be received in time, resulting in a premature tax assessment.

Time Limits for Tax Assessments

After receiving a Notice of Deficiency, a taxpayer has 90 days to file a petition in Tax Court. After the end of this 90-day period, the IRS has 60 days to perform a tax assessment. The IRS may then take a number of different types of actions to collect the amount owed by the taxpayer, including issuing levies to seize a taxpayer’s assets or garnish his/her wages, placing tax liens on a taxpayer’s property, or offsetting a taxpayer’s tax refunds. 

While the IRS is not allowed to make an assessment during an open Tax Court case, it may begin to do so after the end of the 90-day period. In many cases, premature tax assessment occurs because the IRS has not received notification that a taxpayer has filed a petition in Tax Court. Since the 90-day deadline applies to the date that a petition is mailed, if a petition is sent close to the deadline, it may not be received until several days or even multiple weeks after the deadline. If a tax assessment is done even after a taxpayer has filed a petition before the deadline, the taxpayer may file a motion to prevent the assessment or stop IRS collection actions.

Some issues related to the COVID-19 pandemic have increased the possibility that taxpayers may face a premature tax assessment. In March 2020, the IRS extended the deadlines for filing various tax documents, including Tax Court petitions. Any documents that were due after April 1, 2020 and before July 15, 2020 were permitted to be filed by July 15, 2020. However during this time, the Tax Court was closed, meaning even if taxpayers filed Tax Court petitions during this time, the IRS did not receive notification. Because of this, the IRS has performed some premature tax assessments for taxpayers who met all requirements to contest tax deficiencies.

Contact Our San Jose IRS Tax Assessment Lawyer

If you have received a Notice of Deficiency from the IRS, John D. Teter Law Offices can help you understand your best options. We will make sure you meet all requirements when filing a petition to contest a tax deficiency in Tax Court, and we will work with you to determine whether you can take legal action to prevent the assessment or collection of taxes. Contact our San Jose, CA tax law attorney today at 408-866-1810 to learn how we can help you address your tax-related issues.

Sources:

https://www.irs.gov/irm/part35/irm_35-009-002

https://www.irs.gov/pub/irs-drop/n-20-23.pdf

https://www.govinfo.gov/content/pkg/USCODE-2011-title26/html/USCODE-2011-title26-subtitleF-chap63-subchapB-sec6213.htm