What is an IRS Assessment?

What is an IRS Assessment?

When the IRS makes an assessment, it simply means they’re putting a tax liability on the books. An assessment happens one of two ways.

First, you file a tax return, and that’s called making an assessment. When we file a tax return, it is really self-prepared documentation of assessment.

Basically, this says, “This is how much tax that we owe, how much we paid, and hopefully we’ve paid all we owed.”

Alternatively, if we don’t file our taxes, the IRS will make an assessment. That means they’re going to prepare something known as a Substitute For Return.

Essentially, the IRS going to prepare the tax return for us. That’s going to have the same basis of laws as if we have actually filed a tax return for ourselves.

So when the IRS prepares a Substitute For Return, it’s as if we prepare the tax return, and it’s called making an assessment as well. They are determining how much tax we owe.

That may or may not be in our best interest, but generally speaking, it is not in our best interest.