Receiving an IRS Notice of Determination can be intimidating, but don’t panic—it’s just a step in the IRS process that requires your attention. This notice typically means the IRS has decided on a tax matter you’ve been involved in, such as a request for an Offer in Compromise, a Collection Due Process (CDP) hearing, or another dispute resolution. Let’s walk through what it means and what steps you can take.
1. What is an IRS Notice of Determination?
An IRS Notice of Determination is a formal letter to inform you of the agency’s decision after reviewing a tax-related issue. It commonly follows an appeal or request for review, often related to collections, levies, or liens. In a Collection Due Process hearing, for example, the notice signifies the conclusion of your appeal. The IRS outlines whether they’ll continue with collection actions or if you have some relief, such as a new payment arrangement.
2. What’s in the Notice?
The Notice of Determination will summarize the IRS’s findings and explain their decision regarding your case. It will also include information about your rights and what steps you can take next, whether accepting their decision, appealing it further, or taking action to prevent enforcement measures like levies or liens.
3. What Are Your Next Steps?
Depending on your situation, you may have several options:
- Accept the Determination: If you agree with the IRS’s findings, you can accept the outcome and follow any instructions. For example, if the IRS approves a payment plan, you would begin making those payments.
- File a Petition in Tax Court: If you disagree with the IRS decision, you can petition the U.S. Tax Court. You have 30 days from the date of the notice to file, so time is of the essence. Tax Court offers an independent review of your case, possibly leading to a different outcome.
- Negotiate or Take Action: Depending on your situation, you may want to negotiate further with the IRS or submit additional documentation to support your case. This could include applying for another IRS collection option, such as an Offer in Compromise, Installment Agreement, or Currently Not Collectible (CNC) status.
4. Why Timing Matters
Timing is critical when dealing with a Notice of Determination. The IRS gives you a limited window to respond—usually 30 days—to either comply with their decision or challenge it. Failing to act in time could result in enforced collection actions, like wage garnishments or bank levies.
Bottom Line
Getting an IRS Notice of Determination doesn’t have to be overwhelming. It’s a crucial step in the process, and knowing your options—whether to accept, appeal, or negotiate—can help you make the right move. Remember to act quickly and keep all communications with the IRS in writing to protect your rights.
