Tax Deficiency Notices
The states and other taxing agencies must have all gotten together and decided that when in doubt send a Tax Deficiency Notice. These Notices always ask for a tax amount due usually with penalties and interest.
People often tell me, “I owe nothing, so how are these tax amounts calculated?” I suppose the easy answer is that they are made up. But the correct answer is that the taxing agency usually has some basis for the estimated tax amounts such as last year’s liability.
In the end, I guess the goal is to scare you into paying amounts that you do not really owe. Obviously, you can dispute the Notice by sending a letter and documentation, but that of course takes time and money.
Our advice is if the amount is insignificant to just pay it, so it will hopefully go away. This upsets many people, but this is often the prudent path.
12/02/2019
By: Gary Grottke CPA, Quality Back Office LLC