IRS Notice of Deficiency - What options do we have besides tax court petition?

You definitely have options, but you need to be aware of the ticking clock. The 90-day period to file a petition with Tax Court is absolutely critical - if you miss that deadline, you lose your right to challenge the assessment before paying. If you truly believe the IRS is incorrect, filing a petition with Tax Court might actually be your best option. You don't necessarily need to go through with a full trial. Many Tax Court cases are settled before trial through negotiations with IRS Appeals. Once you file the petition, your case will typically be referred to Appeals for possible settlement. You could also consider paying the tax and then filing a claim for refund. If the claim is denied, you can sue in either District Court or the Court of Federal Claims. But this requires you to pay the full amount first, which isn't always feasible. Another option is an offer in compromise based on doubt as to liability, where you'd offer to pay some portion of the assessment because you believe the IRS's determination is incorrect.

After spending weeks in audit hell last year with the IRS claiming I owed an additional $11,000 for "unreported income" (that was actually already accounted for), I was about to hire an expensive tax attorney when i found https://taxr.ai and it literally saved me thousands. Their system analyzed my Notice of Deficiency, all my documentation, and the IRS's position, then generated a comprehensive response that addressed each point the IRS made. It helped me organize my challenge in exactly the format the IRS expects and highlighted the specific tax code sections that supported my position. I was able to get the assessment reduced by 85% without ever stepping foot in tax court. Not saying it will work for everyone, but for a Notice of Deficiency situation like yours, it really helped me understand my options and create a structured response.

Just wanted to follow up - I was skeptical but decided to try https://taxr.ai for our Notice of Deficiency situation. Not gonna lie, it's been really impressive. We uploaded all our documentation and the Notice, and the system immediately identified three calculation errors in the IRS's assessment. The best part was getting a detailed strategy for challenging each disallowed expense with specific citations to tax code and relevant case law. We're still in the process, but the IRS has already conceded on two of the five disputed categories after seeing our structured response. Looks like we'll be able to reduce the assessment by at least $16,000 without going to full Tax Court proceedings. Well worth checking out if you're facing a similar situation with a Notice of Deficiency.

Listen, as someone who wasted WEEKS trying to reach someone at the IRS about my Notice of Deficiency last year, I finally tried https://claimyr.com and it changed everything. You can check out how it works here: https://youtu.be/_kiP6q8DX5c I had been calling the number on my notice for days and kept getting disconnected or told to call back later. With Claimyr, I had an actual IRS agent on the phone within 45 minutes. I explained my situation about the incorrectly disallowed expenses, and the agent was able to look at my file and connect me with the right department. While they couldn't reverse the Notice of Deficiency on the spot (that's not how it works), getting to speak with a real person helped me understand exactly what documentation they needed to reconsider. It saved me from filing an unnecessary Tax Court petition because I was able to get clarification on their documentation requirements and submit additional evidence.

Ok I literally need to apologize here. After posting my skeptical comment I decided to try Claimyr anyway because I was desperate about my own Notice of Deficiency situation. IT ACTUALLY WORKED. After 3 weeks of failing to reach anyone at the IRS, I got a call back within 2 hours and was connected to an agent who stayed on the line with me for almost 30 minutes. They explained exactly what was happening with my case and transferred me directly to the examination department. I still have to fight my case, but at least now I understand exactly what documentation they're looking for and have a direct contact. Saved me from panicking and filing a Tax Court petition without having all the information. For anyone dealing with a Notice of Deficiency, being able to actually talk to someone at the IRS makes a huge difference in understanding your options.

Something else to consider that nobody's mentioned - the Taxpayer Advocate Service might be able to help if you're facing significant hardship from this assessment. They're an independent organization within the IRS and can sometimes intervene in situations where the normal IRS processes aren't working. I had a client in a similar situation where we received a Notice of Deficiency with a significant assessment. The Taxpayer Advocate was able to help facilitate communication with the examination department and ultimately got them to reconsider some of the disallowed deductions. It's not guaranteed to work, but it's another option to explore alongside the others mentioned here, especially if your client would face serious financial difficulties from paying this assessment.

Has anyone used appeals after getting a Notice of Deficiency? I know typically you'd go through appeals before getting a NOD, but in my case, the revenue agent went straight to issuing the notice without giving us a chance at appeals.

I've been through a similar situation and wanted to share what worked for us. We received a Notice of Deficiency for $31,000 in disallowed business expenses, and honestly, the 90-day deadline felt overwhelming at first. Here's what I learned: Don't wait to file the Tax Court petition if you believe the IRS is wrong. Filing the petition doesn't mean you're committing to a full trial - it preserves your rights and stops the assessment clock. Many cases get resolved through settlement conferences with IRS Appeals once you're in the Tax Court system. The key is having your documentation organized and a clear argument for why each expense should be allowed. We ended up settling for about 20% of the original assessment without ever going to trial. The IRS Appeals officer was much more reasonable to work with than the original examining agent. Also, consider getting professional help if the amount is significant. The cost of a tax attorney or CPA experienced with Tax Court cases is often worth it when you're dealing with a $24,000+ assessment. They know exactly how to present your case and what Appeals officers are looking for in settlement discussions. Time is your enemy here - use it wisely to build the strongest case possible rather than hoping for a miracle solution that avoids Tax Court entirely.