Notice of Deficiency

A Notice of Deficiency (NOD) is a formal document issued by the Internal Revenue Service (IRS) to a taxpayer informing them that the IRS has determined that the taxpayer owes additional taxes, penalties, and interest. The NOD will specify the amount of tax, penalties, and interest that the taxpayer owes, as well as the reasons for the IRS's determination.

The NOD is an important document because it gives the taxpayer the opportunity to challenge the IRS's determination and to try to avoid or reduce the amount of taxes, penalties, and interest that they owe. The taxpayer has 90 days from the date of the NOD to file a written response with the IRS. If the taxpayer does not file a response within the 90-day period, the IRS will assess the taxes, penalties, and interest and send the taxpayer a bill.

The taxpayer may also request an appeal of the NOD. If the taxpayer requests an appeal, the IRS will review the NOD and the taxpayer's response and make a final determination. The taxpayer may also appeal the IRS's final determination to the Tax Court.

It is important to note that the NOD is not a final determination of tax liability. The taxpayer still has the opportunity to challenge the IRS's determination and to try to avoid or reduce the amount of taxes, penalties, and interest that they owe.