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The consequences of ignoring a notice of deficiency

The IRS' collection procedures can be unfair and complicated. When the IRS decides that an Orange County resident owes money, it can simply take the money it feels entitled to. A California tax law attorney can help those who face levies and other collection actions fight against the harsh collection practices of the IRS.

It is important to call an attorney when the IRS makes contact. Those who fail to take action can lose up to 90 percent of their paychecks. Ignoring the IRS will not make your tax issue go away. The IRS was recently allowed to continue collection efforts against one pair of taxpayers who repeatedly failed to file taxes and ignored IRS notices. The tax court also determined that the taxpayers were not entitled to fight their tax liability because they received a 90-day letter, also called a notice of deficiency, for each of the tax years at issue.

The IRS did not even have to meet with the taxpayers face-to-face because the taxpayers failed to file their previous returns and did not submit financial statements to support their case. The IRS further alleged that the taxpayers' arguments were frivolous and only designed to delay the collection of the tax due.

The taxpayer's failure to address letters of deficiency made it impossible to dispute the amount of taxes that they owed. The taxpayers could not even claim that they had not received the letters because the IRS produced a Form 3877 to show that the notices were mailed to the right place. This case highlights the importance of getting an attorney involved in the collection process as early as possible.

Source: United States Tax Court, "Kamps v. IRS," Dec. 14, 2011, T.C. Memo 2011-287

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