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When the IRS Sends a “Letter 531” Notice of Deficiency

Posted by Brandon Keim | Oct 18, 2021 | 0 Comments

If you've been audited, you may be wondering what's next. After your in-person meeting and the auditor has reviewed your tax filings, if the auditor decides you owe additional taxes, the IRS will send you a “Letter 531” (also known as a “90-day Letter”).

WHAT IS A “LETTER 531”?

A Letter 531 from the IRS will inform you that the auditor has concluded you owe additional federal income tax. (If the auditor concluded you were owed a refund, you would get a different notice.) The auditor may have concluded that you failed to file a return, or filed a return but paid an insufficient amount. Either way, the IRS claims that you owe more in taxes.

Letter 531 will inform you of the relevant tax years, how much more you are said to owe, and any interest and additional penalties due.

Along with the Letter, the IRS will also send you a copy of the auditor's report, explaining their reasoning and determination.

The letter will also have information on how to challenge the auditor's determination.

WHAT TO DO IF YOU'VE RECEIVED A LETTER 531

While you can pay the amount specified in the letter, you are also entitled to dispute the auditor's conclusion. That's why, before you write that check, carefully read the auditor's report. Make sure you agree with the findings and check for any errors in the report.

If you disagree with the auditor's findings, you can file a petition with United States Tax Court to dispute the IRS's claim.

In the meantime, the notice of petition is often enough for the IRS to send your case to its own office of appeals. There, you may convince them why the auditor's determination is wrong, and why you owe less (or no money at all).

TIME IS OF THE ESSENCE

If you decide to appeal, you have 90 days from the date of the letter (not when you received it) to file a petition in federal court, notifying the court that you're disputing the audit findings. If you file the notice on time, you don't have to pay the amount until after the court reviews your case.

However, if you fail to send the notice on time, you have to pay the entire amount before you can appeal the decision.

Having to pay first, dispute later is a reminder of why you need a skilled tax lawyer as soon as possible. A professional tax attorney understands both the tax concerns, legal issues, and procedural obstacles you must deal with along the way. 

Tax issues can be upsetting and scary, but that's all the more reason to have the right lawyer at your side. If you have received a Letter 531 or any other notification from the IRS, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.

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