A 90-day letter is a statutory notice of deficiency issued under I.R.C. section 6212. A valid notice of deficiency is the statutory predicate for the Tax Court's deficiency jurisdiction; jurisdiction ordinarily attaches when a timely petition is filed.

Under I.R.C. section 6213(a), a taxpayer generally has 90 days from the date the notice is mailed to file a petition with the Tax Court, or 150 days if the notice is addressed to a person outside the United States. Saturdays, Sundays, and legal holidays in the District of Columbia are not counted as the last day. The notice itself is required to state the last date on which a petition may be filed. That requirement comes from section 3463(a) of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, which is uncodified and set out as a note to I.R.C. section 6213. The last sentence of section 6213(a) then treats a petition filed by a date the IRS specified on the notice as timely even if that date was computed generously.

Two things the notice does not mean. It does not mean the IRS has assessed the tax; ordinarily the IRS is prohibited from assessing while the petition period runs and, if a petition is filed, until the Tax Court's decision becomes final. Section 6213(a). And it does not mean you must pay in order to contest the liability. Deficiency jurisdiction is the principal federal tax forum that does not require payment first.

What the Notice Actually Is

Section 6212(a) authorizes the Secretary to send a notice of deficiency by certified or registered mail when a deficiency in income, estate, gift, or certain excise taxes is determined. Section 6212(b) provides that mailing to the taxpayer's last known address is sufficient, which is why an unopened notice sent to a stale address can still be effective.

The notice ordinarily consists of the letter itself, usually Letter 531 or Letter 3219, a statement of the adjustments, and a computation of the deficiency and any penalties. It will identify the taxpayer, the tax years, the amount of the deficiency for each year, the penalties asserted, and the last date to petition.

The notice is sometimes called a ticket to the Tax Court. That is accurate. Without a valid notice, the Tax Court generally has no deficiency jurisdiction. With one, jurisdiction attaches when a timely petition is filed.

How It Differs From an Examination Report and a 30-Day Letter

These three documents are frequently confused, and the consequences of confusing them are not symmetric.

An examination report, with Form 886-A, states what the examiner proposes. Nothing has been determined at the agency level and no deadline of consequence runs from it.

A 30-day letter transmits that report and grants the right to request consideration by the IRS Independent Office of Appeals. Its deadline is administrative. Missing it forfeits the ordinary route to Appeals before assessment, but it does not forfeit the Tax Court.

A statutory notice of deficiency is the agency's formal determination. Its deadline is statutory, is enforced strictly, and is the last opportunity to litigate without paying first.

A practical consequence follows. If you did not receive a 30-day letter and the notice of deficiency arrived first, you have not lost Appeals. A docketed case is frequently referred by Chief Counsel to Appeals for settlement consideration under Rev. Proc. 2016-22 after the petition is filed. The petition preserves the forum; Appeals consideration can still follow.

Computing the Deadline

The controlling date is the date of mailing shown on the notice, not the date you received it and not the date you opened it.

The petition period is 90 days for a notice addressed to a person inside the United States, and 150 days if the notice is addressed to a person outside the United States. Section 6213(a). The reference is to the address to which the notice was directed, and its application to taxpayers who are temporarily abroad, who use a foreign mailing address, or whose last known address is domestic while they reside overseas has generated litigation. If any part of the address or the taxpayer's residence is outside the United States, the computation should be reviewed rather than assumed.

The last day is not a Saturday, Sunday, or legal holiday in the District of Columbia. Section 6213(a).

Timely mailing is timely filing. A petition delivered to the Tax Court after the deadline is treated as filed on the postmark date if the requirements of I.R.C. section 7502 and its regulations are satisfied, including the use of a designated private delivery service where one is used. The Tax Court also accepts electronic filing through its DAWSON system, which records the filing time in Eastern Time.

The Tax Court filing fee and the petition form are available from the court. A petition that is timely but imperfect can generally be amended. A petition that is late generally cannot be cured, subject to the developing law discussed below.

If the Deadline Is Missed

The safest rule is simple: do not plan around equitable tolling. Courts have disagreed about whether the section 6213(a) deficiency deadline is jurisdictional and whether equitable tolling may ever apply. The answer depends on current authority in the appellate circuit that would hear the case, and even where tolling is legally available it is an extraordinary remedy rather than an extension of time.

If no timely petition is filed, the IRS generally may assess the deficiency after the petition period expires and then proceed through the ordinary collection process, including notice and demand, federal tax lien procedures, and ultimately levy procedures where statutory prerequisites are satisfied.

Other routes may remain, but they are narrower and have different prerequisites. Depending on the circumstances, those routes may include refund litigation after payment and a timely administrative refund claim, audit reconsideration in limited circumstances, or Collection Due Process procedures. Collection Due Process generally does not permit a taxpayer who received a notice of deficiency and simply missed the petition deadline to relitigate the underlying liability.

For a detailed discussion of the options that may remain after a late petition, see What Happens If You Miss the Tax Court 90-Day Deadline?.

Choosing the Forum

Filing a Tax Court petition generally forecloses a later refund suit for the same year. I.R.C. section 6512(a). The choice should be made on the merits of the case, not by default.

Considerations include: whether you can afford to pay the full liability, since refund forums generally require it; which appellate circuit governs, since the Tax Court follows the circuit to which the case would be appealable under Golsen v. Commissioner, 54 T.C. 742 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971); whether a jury is available, which it is not in the Tax Court or the Court of Federal Claims; and whether the judges' subject-matter familiarity favors one forum.

For deficiencies of $50,000 or less for each year, I.R.C. section 7463 permits an election to have the case conducted as a small tax case, with simplified procedures. Small tax case decisions are not appealable and are not precedent. That trade is worth understanding before electing it.

What to Gather Immediately

Assemble the following before doing anything else.

The complete notice, including the envelope. The mailing date and the address used are both material.

The last date to petition as stated on the notice, calendared independently of any other date.

The taxpayer name or names exactly as they appear on the notice, and confirmation that they match the returns. A notice issued to one spouse only, or to an entity rather than an individual, changes who must petition.

The tax years and the deficiency and penalty amounts for each year.

The return, the preparer's file, and the workpapers for each year.

The examination report, any 30-day letter, any protest filed, and any Appeals correspondence.

Any consent extending the assessment statute that was signed.

Proof of the taxpayer's address history if the notice went to an old address.

Then verify the arithmetic in the deficiency computation. Notices contain computational errors more often than taxpayers expect, and a computational error is easier to correct than a legal issue is to win.

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If you have received a statutory notice of deficiency, the petition deadline should be reviewed immediately and calendared independently of any ongoing discussion with the IRS. Chase Counsel handles selected federal tax controversy and United States Tax Court matters and can review the notice and the deadline computation. Learn more at www.ChaseCounsel.Com/federal-tax-controversy.

This article discusses federal tax procedure generally and is not legal advice for any particular taxpayer. The computation of the petition period, available forums, and the effect of a missed deadline depend on the notice issued and the taxpayer's circumstances.