If your tax return is audited, or the IRS or FTB proposes an adjustment that requires additional tax to be paid, you might find yourself the unhappy recipient of an IRS Income Tax Examination Change Notice, an IRS Statutory Notice of Deficiency or FTB Notice of Proposed Assessment. Typically, you’ll be given a limited window of time within which you can retain a tax attorney/representative or attempt to fight the proposed assessment yourself.
If you have recently received a Form 4549, Statutory Notice of Deficiency, 90-Day Letter or Notice of Proposed Assessment from the FTB, don’t start stressing quite yet. It is possible to remove or lower a proposed assessment, but you must treat your communications with the FTB and IRS carefully. Many times an IRS agent will call you to conduct a “friendly” interview to obtain facts that best serve the interest of the IRS. Only a tax attorney can protect you from making misstatements.
If a deadline to respond to a proposed assessment passes, it can become final in some circumstances, or the Taxpayer may lose very important procedural rights. If you don’t respond to an IRS Statutory Notice of Deficiency in time or you don’t respond to an FTB Notice of Proposed Assessment in time, the next communication you will likely receive is a bill, outlining your tax obligation, penalties, and interest.
You should always be aware that the IRS and FTB will seek to verify any information you submit in the course of fighting, deferring, or lowering your proposed assessment amount. Therefore, you should always be smart and truthful in your communications with those agencies — however, that doesn’t mean you must volunteer additional information that was not asked for. Finally, remember that a proposed assessment can be sent to either an individual or a business, and that the law is significantly different depending on what kind of entity is receiving the notice.
If you have any questions about the status of your proposed assessment or your chances of lowering your resulting tax obligation, we invite you to contact Abajian Law today for a free consultation.