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Thursday, September 27, 2007


Before the IRS can adjust or assess income taxes for a tax year, it must send a statutory notice of deficiency (also known as a "90 day letter") to the taxpayer, advising the taxpayer of its intent to assess taxes. This notice requires the IRS to wait 90 days before it can assess the taxes, during which period the taxpayer can petition the Tax Court to challenge the proposed assessment. If the taxpayer does not file a timely Tax Court petition, the only way to obtain judicial review of the tax assessment is to pay the taxes and sue for a refund in federal court. Thus, a taxpayer cannot generally obtain judicial review (without paying the tax) unless the taxpayer files a Tax Court petition within the 90 day period.

Under Code Section 6330, a taxpayer can obtain a judicial "due process" hearing in regard to the IRS seeking to levy on his or her assets. Generally, this hearing cannot be used to review the proper assessment of the tax that the IRS is trying to collect - that is, it cannot be used as a backdoor method of getting such a review outside of the above 90 day review procedures. However, Section 6330 does provide that the tax can be reviewed if the taxpayer "did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability."

In a recent Tax Court case involving Section 6330, the taxpayer did not receive his 90 day letter until 12 days before the expiration of the 90 day period due to the taxpayer moving from his last address known to the IRS. The legal issue was whether having only 12 days to file a petition with the Tax Court (which the taxpayer did not do) denied him the "opportunity to dispute" the underlying tax liability. The Tax Court ruled that 12 days was not enough to give him such an opportunity, and thus allowed review of the tax liability in the Section 6330 due process hearing.

Kuykendall, 129 T.C. No. 9 (2007)

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