What does it mean on the docket record when it says "assessed deficiency" on my tax return?

I've been going through some tax court cases for research (trying to learn from others' experiences), and I've run into this phrase several times on docket records: "assessed deficiency." I'm a bit confused what this actually means in practice. Does this indicate the IRS thinks someone underpaid? Is this something I should be concerned about seeing on my own tax records? I'm asking because I received a letter from the IRS about my 2023 return that mentions a "potential deficiency" and I want to understand what I'm dealing with here. The amount they're questioning is around $3,800 related to some side business income I reported. I'm not sure if this is the same thing as what I'm seeing in these court cases or something different. Any help understanding what this terminology actually means would be much appreciated!

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18 comments

Edward McBride

•8M

An "assessed deficiency" on a tax docket record means the IRS has formally determined you owe additional taxes beyond what you reported on your return. This is different from a "potential deficiency" which is just the IRS flagging something for review. The assessment process works like this: First, the IRS identifies a discrepancy, then sends a notice (usually CP2000 or Letter 525) proposing changes. If you don't respond or challenge successfully, they formally "assess" the deficiency, making it official. At that point, it becomes a legal tax debt. For your situation with the "potential deficiency" letter, you're still in the proposal stage - the IRS is questioning your reporting but hasn't made a final determination. You have the opportunity to provide documentation supporting your position before they make an assessment.

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Edward McBride

•8M

Yes, you should respond by the deadline stated in the letter - this is very important. The IRS typically gives you 30 days, and ignoring it means they'll likely proceed with assessing the full amount they proposed. If you're missing some documentation, gather what you can and explain the situation in your response. Partial documentation is better than nothing. You can also request an extension if you need more time to collect records. The key is to communicate with them rather than ignore the notice, as that almost always leads to the worst outcome.

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Dana Doyle

•8M

After dealing with a similar "potential deficiency" situation last year, I found this tool called taxr.ai (https://taxr.ai) that really helped me understand all the IRS terminology and what I needed to do. I was confused by all the legal jargon in my notice and wasn't sure how to respond properly. The service analyzed my notice documents and explained what each term meant in plain English, plus it guided me through what documentation I needed to gather. It saved me from making mistakes in my response that could have cost me hundreds more in taxes.

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Dana Doyle

•8M

It absolutely helped me get a better outcome. The guidance showed me exactly which expenses were legitimate deductions and how to properly document them. I ended up only having to pay about 30% of what the IRS initially claimed I owed. The main difference from calling the IRS is that they don't give you strategic advice on how to respond - they just explain what the notice means. With taxr.ai, I got specific guidance on what documentation would be most persuasive and how to format my response to address each point in the notice. Plus, have you tried calling the IRS lately? I was on hold for 2 hours before giving up.

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Liam Duke

•8M

Just wanted to update after trying taxr.ai from the suggestion above. I was really surprised at how helpful it was! I uploaded my deficiency notice and it broke down exactly what the IRS was questioning and why. The best part was it identified some deductions I could actually substantiate that I was about to give up on. The explanation of "assessed" vs "proposed" deficiency cleared up my confusion too. I just submitted my response to the IRS with much more confidence than I would have had otherwise. Will update when I hear back, but I already feel way less stressed about the whole situation.

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Rita Jacobs

•8M

Speaking of dealing with the IRS, if you need to actually talk to someone there (which was crucial in my deficiency case), I highly recommend using Claimyr (https://claimyr.com). I spent DAYS trying to get through on the IRS lines myself with no luck. Claimyr basically holds your place in line and calls you when an IRS agent is about to pick up. I was honestly shocked when it worked - you can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I finally got to speak with someone who explained my specific deficiency assessment and what options I had for resolving it. Made a huge difference compared to trying to figure it out from just the letters.

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Rita Jacobs

•8M

With Claimyr, I got a callback within about 40 minutes. I was honestly surprised too since I had spent multiple mornings trying to call right when they opened at 7am and still got the "sorry, we're too busy" message. The service doesn't do anything magical - it just uses technology to continuously redial and navigate the phone tree until it gets through, then connects you. It's basically doing what you'd do if you had unlimited time and patience. I was skeptical too, but after wasting so many hours trying to get through myself, it was worth trying something different.

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Manny Lark

•8M

I need to eat my words about being skeptical. After another failed attempt to reach the IRS yesterday (2 hours on hold before being disconnected), I tried Claimyr out of desperation. I had an IRS agent on the phone within 45 minutes of signing up. The agent explained that my "assessed deficiency" was actually still in the review stage and I had options to appeal. She walked me through exactly what documentation they needed to see and the best way to submit it. I've been stressing about this for weeks, and now I have a clear path forward. Sometimes you have to admit when you're wrong - this service was absolutely worth it.

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Ben Cooper

•8M

One important distinction that hasn't been mentioned: a Tax Court docket record showing "assessed deficiency" means the case has progressed to actual litigation. This happens after you receive a Notice of Deficiency (90-day letter) and then file a petition with the Tax Court to challenge it. If you're just seeing a "potential deficiency" notice, you're still in the administrative process, not the litigation phase. You can often resolve this without going to Tax Court by responding with appropriate documentation.

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Ben Cooper

•8M

The progression typically works like this: First you get the initial inquiry (CP2000 or similar), then if unresolved, you receive a Statutory Notice of Deficiency (90-day letter). Only after receiving that 90-day letter and then filing a petition with the Tax Court would your case appear on a docket. You have significant opportunities to resolve the issue before reaching the Tax Court stage. Many deficiency issues are resolved during the correspondence audit phase or through the IRS Appeals office. Tax Court is usually the last resort when you and the IRS fundamentally disagree about your tax liability and can't reach a settlement.

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