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Investments glossary

Notice Of Deficiency

A notice of deficiency is also known as a statutory notice or a statutory notice of deficiency because tax laws require the Internal Revenue Service (IRS) to issue a notice of deficiency before assessing additional income tax, estate tax, gift tax, and certain excise taxes unless the taxpayer agrees to the additional assessment. Although its language says the IRS is proposing a change, the notice of deficiency is a legal determination of tax deficiency that is presumptively correct.1

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