Everything You Need To Know About A Statutory Notice Of Deficiency!

A statutory notice of deficiency is a legal notice that establishes the taxpayer's shortage or delays in tax. The official name for this notice issued by the IRS (Internal Revenue Service) is the IRS Notice CP2319A: Notice Of Deficiency and Increase In Tax. 

What Is Notice Of Deficiency? 

A notice of deficiency is a legal yet authorized written claim by the IRS to a taxpayer about a tax deficiency. It states that a taxpayer owes extra income tax or interest on a given amount of additional penalties. Sometimes, the IRS notices the unmatched records of the reported information to them. In such cases, the IRS issues this notice by proposing a change to a tax return. 

In general, when a tax detail given by a third party like a financial institution or employer is found incorrect or unmatched with the previous records, the IRS suggests a change in a tax return. Ignoring this crucial notice of the IRS may cause you to experience a host of penalties. 

How Statutory Notice Of Deficiency Works 

The statutory notice of deficiency may cause a taxpayer to be delayed in or fail to revert the appeal in time. Here is how this notice works: 

• The notice prompts the tax details received from a third party such as the employer or financial institution about the non-matching information provided by the taxpayer. 

• When the evaluation results in a tax deficiency, the IRS presents a 30-day letter to the taxpayer. During this notice, the taxpayer has 30 days to respond before the IRS processes further changes in the return. 

• The notice explains any changes or alterations to the taxpayer and the procedure of calculating the tax amount. 

How Can You Avoid Notice Of Deficiency? 

Here are some steps you can take to prevent a notice of deficiency in the future:

• Keep a systematic and accurate record of details all year long. 

• Avoid filing for the tax return until you have received all your complete financial statements. 

• Be sure that their income includes the tax return. 

• Follow the instructions on reporting income, expenses, and deductions strictly. 

• Check records with your employer, mortgage broker, bank, and other income sources to ensure that everything is listed correctly. 

In the end, a statutory notice of deficiency reminds you to secure yourself from penalties by responding timely to the appeal. We hope this guide has helped you understand what you need to know about the IRS's crucial, legal and authoritative written claim.