What action must a taxpayer take if a notice of deficiency is received from the IRS?

When a taxpayer receives a notice of deficiency from the IRS, it is essential to respond within the stipulated time frame. A notice of deficiency is a formal communication indicating that the IRS believes the taxpayer owes additional taxes. The taxpayer has a limited window to contest this notice, typically 90 days from the date of the notice, during which they can request a hearing or challenge the IRS's findings.

Timely action is crucial because failing to respond within the specified period can lead to the IRS assessing the tax and any related penalties without the taxpayer having the chance to appeal the decision. This emphasizes the importance of adhering to deadlines established by the IRS for any correspondence related to tax assessments. Responding appropriately ensures that the taxpayer retains their right to dispute the findings rather than allowing them to become final due to lack of action.