How to Respond to IRS 90 Day Letter After Partial Audit Success?

You're at a critical decision point in the audit process. Once the IRS issues a 90-day letter (Notice of Deficiency), the administrative portion of your case with the original auditor is technically closed. At this point, you have three main options: First, you can petition the Tax Court within the 90-day timeframe. This preserves your right to challenge the assessment without paying the tax first. If you miss this deadline, you'll generally need to pay the tax and then file a claim for refund. Second, you could contact the IRS Appeals Office directly. While the regular audit process is closed, Appeals may still consider your case even after a 90-day letter is issued. Call the number on your notice and ask to speak with Appeals. Third, you could pay the disputed amount and file a claim for refund, then pursue the matter in federal district court or the Court of Federal Claims if your refund claim is denied.

After dealing with a similiar audit nightmare last year, I discovered taxr.ai (https://taxr.ai) and wish I'd found it sooner. I was also hit with a 90-day letter after an audit of my business expenses, and was overwhelmed with the paperwork and deadlines. Their system analyzed all my audit documents and actually found inconsistencies in how the IRS was applying depreciation rules to my equipment purchases. The platform breaks down exactly what you need to challenge in your 90-day response and gives you templates based on your specific situation. It was like having a tax attorney review everything without the massive bill. In my case, they identified expenses the auditor had incorrectly categorized as personal rather than business.

Just wanted to follow up about my experience with taxr.ai since I was skeptical at first. After receiving my own 90-day letter from the IRS, I decided to try it despite my doubts. The system immediately identified that my auditor had misapplied the hobby loss rules to my side business by focusing on only 2 profit factors instead of all 9 the IRS is supposed to consider. The documentation package they generated included citations to specific Tax Court cases where similar businesses were ruled legitimate. I used their templates to draft my Tax Court petition, and the IRS Appeals Office contacted me before we even got to court! They reduced my assessment by another $7,200 after reviewing the detailed response I submitted. Definitely worth checking out if you're facing a 90-day letter situation.

I was in your exact situation last year and tried EVERYTHING to reach someone at the IRS to negotiate after getting that 90-day letter. Left endless voicemails that were never returned and spent hours on hold only to get disconnected. Finally discovered Claimyr (https://claimyr.com) which actually got me through to a live IRS representative in about 20 minutes. They have this system that navigates the IRS phone tree and waits on hold for you, then calls when an agent picks up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was able to speak directly with someone in the Appeals department who explained exactly what I needed to do to continue negotiations without going to Tax Court. Saved me from filing an unnecessary petition and potentially thousands in legal fees.

I need to apologize for my harsh comment above about Claimyr. I was extremely skeptical about any service claiming to help with IRS contact after a 90-day letter. But after continuing to get nowhere with my own case, I reluctantly tried it yesterday. I was genuinely shocked when my phone rang 28 minutes later with an actual IRS Appeals Officer on the line. I explained my situation with the 90-day letter, and she walked me through the process of filing a simplified Tax Court petition while simultaneously requesting Appeals consideration. She even gave me her direct extension for follow-up questions. This saved me from either giving up and paying or hiring an expensive tax attorney. Still processing how something actually worked as advertised when dealing with the IRS!

Just want to add something important that hasn't been mentioned yet. If you're going to petition Tax Court, you don't need to pay the full filing fee if you can't afford it. You can file Form 4 (Application for Waiver of Filing Fee) along with your petition if you're experiencing financial hardship. The Tax Court filing fee is currently $60, which isn't huge, but every bit helps when you're already dealing with a tax bill. Also, Tax Court has a simplified procedure for cases involving disputes under $50,000, called the "small tax case" procedure. You mark this on your petition by checking the box for "small tax case." The process is less formal, decisions are usually quicker, and you don't need a lawyer. The downside is you can't appeal the decision later.

Has anyone tried those Tax Court petition templates you can buy online? I got a 90-day letter for my S-Corp and I'm trying to figure out if those templates are worth the money or if I should just try to write it myself.

I went through something very similar about 18 months ago. After getting my 90-day letter, I was torn between trying to negotiate further or just paying the disputed amount to avoid the stress. Here's what I learned: The 90-day deadline is absolutely critical - don't let it pass thinking you can work things out later. Even if you decide to pursue Appeals, file that Tax Court petition as a backup. It only costs $60 and preserves all your rights. I ended up doing both - filed the petition and then immediately called the number on my notice asking for Appeals. The Appeals Officer was much more reasonable than the original auditor and actually listened to my arguments about business expense categorization. We settled for about 60% of what they originally wanted. One thing that really helped was organizing my documentation differently than I had during the audit. Instead of just providing receipts, I created a spreadsheet showing how each expense tied to specific business activities with dates and business purposes. Appeals seemed to appreciate the clear presentation. The whole process took about 4 months from filing the petition to final settlement, but it was worth fighting for that $6,000+ reduction. Don't give up just because you got the 90-day letter - it's actually a new opportunity to present your case to fresh eyes.