February 2, 2026
An unexpected tax bill can derail financial planning. When the Internal Revenue Service (IRS) suspects that a taxpayer has a tax liability, it sends notices to the taxpayer, usually requesting a prompt response. However, if no response is provided, the IRS will eventually send a “Notice of Deficiency” or a “90-day letter” to the taxpayer. This notice should not be disregarded because it provides the taxpayer with one final opportunity to contest the liability in court before an enforceable judgment is entered against the taxpayer.
To dispute the notice, a petition must be filed with the United States Tax Court. A taxpayer has a strict 90-day deadline (or 150 days if the taxpayer is out of the country) to file a petition with the court and challenge the notice before making payment. There is a small-case division of the tax court where IRS assessments for taxes and penalties of $50,000 or less in a single year can be adjudicated.
Taxpayers may represent themselves in court without an attorney, but if the issues are complex and/or large enough, they should consider hiring an attorney with experience in this type of litigation. It is not worth petitioning the Tax Court as a delay tactic if the taxpayer has a losing case, because interest and penalties for non-payment of taxes accrue every day. A taxpayer may request a payment plan directly from the IRS, which can reduce penalties and spread payments over time. On the other hand, many areas of tax law require judgment and interpretation, and attorneys have noted that more than 50% of all petitions filed in tax court bring some tax reduction.
For further reading, see:
https://taxattorneydaily.com/tax-law/going-to-tax-court/
https://www.ustaxcourt.gov/petitioners-start/
https://www.irs.gov/payments/online-payment-agreement-application
DISCLOSURE:
Fulcrum Wealth Advisors, LLC (FWA) is a registered investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC does not imply a certain level of skill or training. The firm is not registered as a broker-dealer and is not affiliated with any broker-dealer.
Advisory services are provided only to clients who enter into a written advisory agreement with FWA. Investment advisory services are offered based on an individual client’s financial objectives, risk tolerance, and investment needs.
This material is provided for informational and educational purposes only and does not constitute personalized investment advice, a recommendation, or an offer to buy or sell any security. Any references to specific securities, asset classes, or investment strategies are for illustrative purposes only and may not be suitable for all investors.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. No investment strategy can guarantee profits or protect against losses in all market conditions.
Additional information about FWA, including its services, fees, and business practices, is available in the firm’s Form ADV Parts 2A and 2B, which are available on request or at www.adviserinfo.sec.gov