When you start seeing notices like “Additional Tax Assessed on your tax filings, it may cause some worry: what does it mean exactly, and is it a good or bad thing? If you don’t have a tax attorney to help out, the additional tax assessed notice shouldn’t be a reason to hire one.
Tax assessment is different from taxation, and if you have this notice in your tax reports, you may want to know what it means and what action you should take. This article will show you what the additional tax assessed notice means and what action you may have to carry out after receiving it.
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What is a Tax Assessment?
Before the government can tax your property, they typically conduct an assessment to determine the value of the property. The value of your property is what determines how much you pay as property tax to the government in the long run.
It’s crucial to note that the tax assessment on a property doesn’t depend on its fair market value, and in most cases, it doesn’t impact it either. The use of the assessment is limited to tax purposes only; it’s completely irrelevant outside of tax-related discussions.
When you get your tax assessment, it’s possible to disagree with it, compelling the government to redo the assessment. The best way to go about this is submitting an appeal, which can either be done informally over a phone call or an in-person meeting or formally by writing a letter of appeal.
It’s crucial to note that your tax assessment is different from the property value, which is also different from the property tax. The property tax is the tax you have to pay for owning a property, and it’s usually determined using your tax assessment, which in turn, depends partly on your property value.
What Does Additional Tax Assessed Mean?
Before the government can make a fair assessment of your taxes, you’ll need to submit supporting documents, which would help in the assessment. If some of these documents are unavailable, you may receive an estimated assessment, which will serve as the basis for your property tax.
However, if you’re paying tax based on an estimated assessment, you’ll still have to submit your submitting documents. If the government decides that the reassessment shows your tax obligation be more than what you currently pay, you may receive an additional assessment notice.
This notice usually includes the adjusted taxes after the assessment, and you can either choose to pay the new tax or disagree with the assessment. As the preceding section suggests, you can disagree with the additional assessment by writing an appeal letter or by contacting the office of the assessor directly.
Before going on to disagree with an assessment, it’s crucial to understand what’s included in the assessment. While most people see the hefty figures and become confused, you should note that you don’t have to pay the actual readjusted amount.
The amount you’re defaulting across to the additional tax assessment will be added to your original property tax and the new report will carry the overall tax figure. Your tax liability in that case will be the new figure minus what you’ve paid previously.
You should also note that deliberately hiding some of your assets may attract a penalty in addition to the reassessment. If there are certain documents you need to submit to the IRS, you should submit them willingly and on time to avoid harsher punishments that may result from frustrating efforts to assess your assets properly.
When Can the IRS Assess Additional Tax?
When you receive an additional tax assessment, you should generally be able to appeal using the period of assessment as the reason. If the assessment happened outside the accepted window, it should be voided, but when can you receive an additional tax assessment?
The IRS must assess all additional taxes within three years of the due date of the original tax. In special cases, however, the government may still be able to assess taxes outside the three-year window.
One of the special cases that makes it possible to assess additional tax outside the window is filing a fraudulent tax return. The same also applies to not filing a tax return at all, as both cases will make it possible for the IRS to assess your taxes at any time. In addition to potentially getting more tax obligations, you can also get fined for this practice.
If you knowingly or unknowingly omit an amount that is greater than 25% of the amount in the return you filed, the IRS will be able to make an additional tax assessment outside the three-year window. It’s crucial to note that there’s a deadline in this case too, but it’s twice the length of time at six years.
How to Control Your Additional Tax Assessments
Everyone wants to pay as little as possible for their taxes, and additional tax assessments aren’t going to help you achieve that goal. If you don’t want to pay your entire income in taxes, you should try some creative ways to ensure you stay at the top of your tax assessments.
A suggestion is to appeal the assessment if you believe it to be higher than it should be. You can appeal by writing a letter to the assessor’s office or by visiting in person. It’s also crucial to note that there’s a deadline for appealing tax assessments; if you miss the deadline, you’re paying the entire thing.
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Conclusion
Doing your taxes isn’t exactly an enjoyable activity. With the numerous technical terms that you have to put up with, understanding what’s going on can be pretty difficult in some cases. To help you out, this article reviews the question: what does additional tax assessed mean?
While there’s a lot for you to learn about the topic, the basics you should know about it is that you may have to pay additional fees for a previously undeclared asset. If you’re not okay with the assessment, you can go ahead to appeal the reassessment.