A “90-Day Letter” typically refers to a notice sent by the Internal Revenue Service (IRS) to inform a taxpayer that the IRS intends to assess additional taxes, penalties, or other adjustments to their tax return. This notice is formally known as a “Notice of Deficiency” and is often sent after the IRS completes an audit or examination of the taxpayer’s return.

Here’s how the process generally works:

1. **Audit or Examination:** The IRS examines the taxpayer’s return to ensure that the reported income, deductions, and credits comply with tax laws. If the IRS finds discrepancies or issues during the examination, they may propose changes to the return.

2. **Notice of Deficiency (90-Day Letter):** If the IRS proposes adjustments that result in additional taxes owed, they issue a Notice of Deficiency to the taxpayer. This notice is commonly known as the “90-Day Letter” because it informs the taxpayer that they have 90 days to either agree with the proposed changes, pay the additional taxes, and/or file a petition in the United States Tax Court.

3. **Options for the Taxpayer:**
– **Agree and Pay:** The taxpayer can agree with the proposed changes, pay the additional taxes, and resolve the matter without going to Tax Court.
– **File a Petition:** If the taxpayer disagrees with the proposed adjustments, they have the option to file a petition in the United States Tax Court within the 90-day period. This allows them to dispute the IRS’s findings before a court without first paying the disputed amount.

4. **Consequences of Inaction:** If the taxpayer does not respond within the 90-day period, the IRS can assess the additional taxes, and the taxpayer may lose the opportunity to challenge the proposed adjustments in Tax Court.

It’s important for taxpayers who receive a 90-Day Letter to carefully review the proposed adjustments, consider their options, and, if necessary, seek advice from a tax professional. The letter provides a formal opportunity for the taxpayer to address and resolve any discrepancies with the IRS before the assessment becomes final.