If you receive an IRS notice of deficiency in Illinois, do not ignore it. The notice signals that the Internal Revenue Service (IRS) believes you owe additional taxes. However, it also gives you an opportunity to challenge the proposed amount.
What is a notice of deficiency?
An IRS notice of deficiency is not a final final tax assessment. Simply put, this is the IRS telling you in writing that it believes you owe more taxes than what you reported. Under federal law, the IRS must send this notice before it can assess and collect any additional taxes from you. Taxpayers commonly refer to this document as a “90-day letter.”
Why did you receive this notice?
Unreported income, miscalculated deductions or discrepancies found through third-party reporting are common triggers. For Illinois residents, state law requires you to report federal tax adjustments to the Illinois Department of Revenue within 120 days after the federal change becomes final or agreed upon.
What does the 90-day deadline mean for you?
During this 90-day period, the IRS cannot legally assess or collect the disputed amount. If that deadline passes without action, the IRS can formally proceed. Using this window wisely can help you avoid losing important rights or facing collection actions.
How can you dispute the notice?
If you disagree with the IRS’s proposed assessment, there are ways to address the dispute:
- Petition the U.S. Tax Court: This allows you to formally dispute the IRS findings before paying anything
- Request an IRS Appeals Conference: This is a less formal route that allows you to resolve the dispute directly with the IRS Appeals Office without going to court
- Pay and file a refund claim: If you choose to pay the assessed amount, you can still file a formal claim for a refund if you believe the IRS calculation is incorrect
Reviewing the notice carefully and understanding how each process works can help you determine which path best fits your situation.
Act before the 90-day window closes
Illinois taxpayers have formal protections. This means you are entitled to clear information, fair treatment and the opportunity to dispute what you owe. The 90-day window gives you a limited period to evaluate your options and take action. Responding promptly can help you protect your rights and avoid unnecessary complications.