Notice of Intent to Assess: What to Do Next

A Notice of Intent to Assess alerts you to a potential issue with a previously filed tax return. This article will guide you through understanding the notice, preparing a response, and knowing what to expect from the tax authority.

Decoding Your Notice of Intent to Assess

A Notice of Intent to Assess is a proposal, not a final bill. It is issued when a tax agency, like the IRS or a state revenue department, believes tax was underreported for a specific period. This discrepancy is often identified through automated programs that compare your return to data from employers and financial institutions or as the result of an audit. The notice, which at the federal level is often called a 30-day letter, serves as a preliminary notification of the agency’s findings.

Review the document to understand the government’s position. Verify your taxpayer information, such as your name and Social Security Number. The notice will also include a unique notice number, a specific date, and the tax year or years in question. This information is important for all future correspondence.

The notice details the proposed amount due and an explanation for the changes. The amount is broken down into the additional tax, penalties, and interest calculated to date. The explanation section details why the agency is proposing the change, such as disallowed deductions or unreported income. This section may contain reason codes, which you can look up on the agency’s website for more information.

The notice will specify a response deadline, which is a firm date. This is often 30 or 60 days from the date on the letter. Missing this deadline can result in the agency moving forward with the assessment, which may lead to a formal bill and the start of collection activities.

Preparing Your Response Package

To formulate a response, first gather and organize your information. Locate your original tax return for the year specified in the notice. Having the return in hand allows you to see what the agency is questioning.

With the notice and your return side-by-side, perform a direct comparison. Go through your return line by line, focusing on the areas the agency has identified. This will help you pinpoint the source of the discrepancy, such as a mathematical error, a misreported income item, or a disallowed deduction.

Next, collect all supporting documentation that substantiates the figures on your original return. Depending on the issue, you may need to find W-2s, 1099 forms, bank statements, canceled checks, or detailed receipts for business expenses. For other deductions, items like mileage logs, legal agreements, or property tax records might be required.

After reviewing your documents against the proposed changes, you must decide if you agree with the assessment, disagree entirely, or agree with only some of the adjustments. This decision determines the type of response you will send to the taxing authority.

How to Formally Respond to the Taxing Authority

If you review your records and conclude that the agency is correct, the process is straightforward. Sign and return the response or consent form included with the notice. You should then submit payment for the full amount of tax, penalties, and interest. Payment can be made online or by mail, and you must include your name, taxpayer ID number, the tax year, and the notice number.

If you disagree with the proposed assessment, you must file a formal protest by writing a detailed letter to the agency. Your letter must state that you are protesting the changes and include your name, address, taxpayer ID, the tax year, and a copy of the notice. The letter also needs a statement of facts supporting your position and a citation of the law or other authority you are relying on. Attach copies, not originals, of all supporting documents. It is highly recommended to send this entire package via certified mail with a return receipt requested to have proof of timely filing.

If you partially agree with the notice, your response is a hybrid. Indicate on the response form which adjustments you accept and which you are protesting. Pay the amount you agree is owed and submit a formal protest letter with supporting documentation for the disputed items. This preserves your right to appeal the contested issues.

What to Expect After Submission

If you agreed with the notice and submitted full payment, the process is near its conclusion. The tax agency will likely send a final bill showing a zero balance or a formal case closure letter. This confirms your payment was received and the matter is resolved.

If you filed a protest, anticipate a multi-step process. First, you will receive an acknowledgment letter from the agency confirming they have received your protest package. This letter does not provide any judgment on the merits of your case but confirms your response is in their system.

After the acknowledgment, your case will be assigned to an appeals or review officer. This individual will conduct an independent review of the facts and your arguments. It may take several weeks or months before the officer contacts you to discuss the case, request more information, or schedule a conference.