Your Right to Appeal a Notice of Deficiency Determination
Idaho law gives taxpayers the right to protest a Notice of Deficiency Determination (NODD) they receive from the Tax Commission.
You have 63 days from the date we mail the NODD to file a written protest to request that we redetermine the deficiency (see Idaho Code section 63-3045). The NODD is sent to your last known address on file with the Tax Commission. Your written protest must contain the following information to be "perfected"*:
- Your name, address, and tax identification number (Social Security number, Federal Employer Identification Number, Idaho tax permit number, or Individual Taxpayer Identification Number)
- The tax period(s) the deficiency relates to
- The specific item(s) you disagree with, and
- The factual or legal basis for the objections made.
*"Perfected" means that your protest can proceed to the next stage.
If your protest includes all the required information, we'll send you an acknowledgment letter.
If your protest doesn't include all the required information, we'll send you a letter telling you what you need to do to perfect your protest. The Tax Commission must receive the information required to complete your protest within 28 days from the date on the Tax Commission's letter notifying you that your protest wasn't complete; otherwise, the NODD becomes final on the 29th day, and you lose your right to appeal. When appropriate, the Tax Commission may reduce the amount of deficiency during the 29-day period.
If your protest isn't resolved by the unit that sent the NODD, your protest will be transferred to the Tax Commission's Appeals Unit.
Our Appeals Unit, a group independent from the unit that sent the NODD, is responsible for reviewing and resolving your protest.
The mission of the Appeals Unit is to resolve disputes with taxpayers in an informal, timely, and consistent way, and to determine the correct amount of a taxpayer's tax liability. Your tax liability is your full debt and includes tax, interest, and any penalty that applies.
When the Appeals Unit receives your perfected protest, an appeals specialist is assigned to your case. The specialist is your point of contact and will send you a letter that outlines the next steps in the appeals process, including the right to an informal hearing. This letter is called the hearing rights letter. You'll also receive your case number.
If you request an informal hearing, the appeals specialist will ask you for a list of dates when you're available. You can either appear in person at the Tax Commission's Boise office or join by phone.
You can also provide additional documents before the hearing.
If you don't respond to the letter the appeals specialist sends you or if you don't appear for your hearing (and didn't reschedule), we may issue a decision after 42 days from the date of the hearing rights letter or the date the hearing was scheduled. The decision will be based on the material available in your protest file.
An informal hearing is your chance to discuss the NODD and your protest with the Tax Commission. Your appeals specialist will attend; a Tax Commissioner may attend. Other Tax Commission staff or representatives from the Idaho Office of the Attorney General may attend as well. The informal hearing is like a conference. No one is under oath, and the "rules of evidence" (as in a legal proceeding) don't apply.
The informal hearing gives you the opportunity to explain why the NODD is incorrect. Although the appeals specialist has access to the information on file with the Tax Commission or that you previously provided to the unit that sent the NODD, please bring any relevant information such as new documents, records, or any other evidence that supports your position. You can ask questions at the conference, so you might want to bring a prepared list of questions with you. You might also be asked questions during this conference.
With advanced notice, you can make an audio recording of the meeting with your own equipment and at your own expense. We can make a recording if we give you notice before the conference. You can ask for a transcript or copy of our recording (a fee is charged).
Representation at the informal hearing
You have the right to be represented or accompanied by any person of your choice at the hearing.
However, if you want someone to act on your behalf following the hearing, you must authorize this in writing. We have a Power of Attorney form designed for tax matters. You can use this form to appoint an attorney, accountant, tax preparer, family member, friend, or anyone else to act on your behalf.
A case can be resolved in several ways:
- We can issue a decision that upholds the NODD, modifies the NODD (to either increase or decrease the NODD), or cancels the NODD entirely,
- You can withdraw your protest, or
- We can resolve your protest through a settlement agreement.
A final decision won't be announced at the close of your informal hearing.
Although it depends on the complexity of the case, your appeals specialist will take the following actions to review and resolve your case:
- Research relevant tax laws and rules
- Review legal precedents
- Evaluate any new information, documents, or legal arguments received during the appeals period (including during the informal hearing)
- Evaluate any new issues that may arise during the appeals period which could potentially increase or decrease the tax liability.
Your appeals specialist may discuss your case – including its merits, strengths, and weakness; new issues; and each parties' positions – with the unit that issued your NODD. If your protest is dated as of July 1, 2017 or later, you can participate in discussions between the appeals specialist and the staff that issued the NODD, except for administrative or procedural discussions that don't address the substance of the issues or positions taken in your case.
You can make an offer to settle your appeal. It's a written request and explains why the Tax Commission should accept your offer based on any of the following reasons:
- Disputed liability – You and the Tax Commission have a reasonable disagreement on the existence or amount of the tax liability under the law. A settlement based on disputed liability evaluates the risks of litigation.
- Doubt as to collectibility – Your assets and income may not be enough to pay the full amount of the liability.
- Economic hardship – You could pay the liability in full, but doing so would limit your ability to pay basic living expenses. The settlement amount is based on your facts and circumstances.
- Promotion of effective tax administration – Takes into account fairness and compelling public policy reasons that you identify. The settlement is fair based on the facts and circumstances of the case.
Your appeals specialist will evaluate your offer, sometimes in consultation with other staff, and make a recommendation to the Tax Commissioners.
An offer isn't final until you receive a written settlement agreement signed by a Tax Commissioner or authorized delegate.
Read more about settlements in Tax Commission Administration and Enforcement Rules 500 and 501.
We must issue a final decision within 180 days of either:
- The conclusion of the informal hearing (if we didn't give you extra time to provide new evidence or testimony), or
- The date of a written request from you for a final decision on the issue. This request for a final decision must be the sole subject of your letter. See Tax Commission Administration and Enforcement Rule 325.04 for more information. If you request a final decision, we may deny any further request from you to provide more evidence or documents or to appear at any proceeding during the 180-day period.
We can delay a final decision if you agree in writing to waive the 180-day requirement. The waiver may be for a fixed period or open-ended.
Continuing a protest after a final decision
If you disagree with the Tax Commission's final decision, you have more appeal rights:
- Individual income tax – Appeal to the Board of Tax Appeals (BTA) or a district court.
- Sales, use, or corporate income tax (and amount is over $25,000) – File a petition in district court.
- Sales, use, or corporate income tax (and amount is $25,000 or less) – File a petition with the BTA or a district court.
You have 91 days to file a petition. After 91 days, all appeal rights expire. If you're filing in district court, file in Ada County or the Idaho county where you live or have your main office or place of business.