How the IRS assessment process works

The assessment process starts when the IRS reviews a filed return and determines the correct tax. An assessment is the formal recording of a taxpayer’s liability. After assessing tax, the IRS will usually send a notice and demand for payment; that notice explains the proposed change, the amount due (including penalties and interest), and the timeframe to respond. (See the IRS overview: https://www.irs.gov/businesses/small-businesses-self-employed/understanding-the-irs-assessment-process)

Key stages (simplified):

  • Filing and initial review — the IRS compares return data to its records and may make adjustments.
  • Assessment — the IRS formally records the tax owed.
  • Notice & demand — the taxpayer receives written notification and a deadline to respond.
  • Protest/appeal — the taxpayer may contest the assessment through administrative appeals or in Tax Court.
  • Collection actions — if unpaid after notices and opportunities to resolve, the IRS can file a federal tax lien, issue levies, or take other collection steps.

Important timelines and limits

  • Assessment window: The IRS generally has 3 years from the date you file to assess additional tax. That period extends to 6 years if you omit more than 25% of gross income, and there is no time limit if the IRS can prove fraud or if no return was filed. (IRS — statute of limitations: https://www.irs.gov/filing/individuals/statute-of-limitations)

  • Collection Statute Expiration Date (CSED): The IRS typically has 10 years from the assessment date to collect a tax debt. After that period, the obligation expires unless the IRS suspended or extended collection. (IRS collections guidance)

  • Response windows: Typical IRS notices give 30 to 90 days to respond. For a Notice of Deficiency (the “90-day letter”), taxpayers generally have 90 days to file a petition in U.S. Tax Court. For a Notice of Intent to Levy with a right to a Collection Due Process (CDP) hearing, you usually must request CDP within 30 days. (IRS — Collection Due Process: https://www.irs.gov/appeals/understanding-collection-due-process-cdp)

Taxpayer rights and practical steps

You have rights throughout the assessment and collection process — including the right to be informed, to appeal, and to representation. The Taxpayer Bill of Rights and IRS guidance explain these protections (IRS Taxpayer Advocate and IRS publications).

Practical steps I use with clients:

  1. Read the notice carefully and check the assessed items against your records. Don’t ignore it.
  2. Gather supporting documents (returns, W-2/1099s, receipts). Keep records for at least as long as the statute that applies — commonly 3–7 years; for contested assessments keep them until the matter is fully resolved. See our guide on document retention for audits: https://finhelp.io/glossary/document-retention-best-practices-to-survive-an-audit/.
  3. Respond in writing and on time. If you agree with the assessment, arrange payment or request an installment agreement immediately to limit additional penalties and interest.
  4. If you disagree, file an administrative appeal or petition the Tax Court within the applicable deadline. Our guide on decoding audit and examination notices explains how to organize a response: https://finhelp.io/glossary/decoding-audit-and-examination-notices-a-practical-guide/.
  5. Consider collection alternatives — installment agreement, offer in compromise, or temporary hardship status — and consult a CPA, enrolled agent, or tax attorney for complex cases.

Common misconceptions

  • The IRS does not automatically seize assets right after an assessment. It must generally send notices, provide demand for payment, and follow procedural rights before levying (except in certain emergency situations).
  • Receiving a notice does not mean you will lose; many assessments are resolved through documentation, correction, or appeal.

When to seek professional help

If the assessment is large, alleges fraud, results in a lien or levy, or you face imminent enforcement, obtain professional representation. In my practice, early engagement of a qualified representative often reduces penalties and prevents collection escalation.

Sources and further reading

Professional disclaimer: This article is educational and does not constitute legal or tax advice. For personalized guidance, consult a qualified tax professional or attorney.