§ 44-30-81. Notice of deficiency. (a) General. If upon examination of a taxpayer's return the tax administrator determines that there is a deficiency, the administrator may mail a notice of deficiency to the taxpayer at his or her last known address in or out of this state. If a husband and wife are jointly liable for tax, a notice of deficiency may be a single joint notice, unless the tax administrator has been notified by either spouse that separate residences have been established, in which event a duplicate original of the joint notice shall be mailed to each spouse at his or her last known address in or out of this state. If a taxpayer has died or is under a legal disability, a notice of deficiency may be mailed to his or her last known address in or out of this state, unless the tax administrator has received notice of the existence of a fiduciary relationship with respect to the taxpayer.

(b) Notice of deficiency as assessment and demand for tax. After thirty (30) days from the mailing of a notice of deficiency, the notice shall be an assessment and a notice and demand for tax to be paid at the place and time specified in the notice, together with interest, additions to tax, and civil penalties stated in the notice, except only for any tax or other amounts as to which the taxpayer has within the thirty (30) day period filed with the tax administrator an "administrative petition" under § 44-30-89. If the notice of deficiency is addressed to a person outside of the United States, the period shall be one hundred fifty (150) days.

(c) Restrictions on assessment and levy. No assessment of a deficiency and no levy or proceeding in court for its collection shall be made, begun, or prosecuted, except as provided in § 44-30-82(b), until a notice of deficiency has been mailed to the taxpayer, nor until the expiration of the time for filing an administrative petition contesting the notice, nor, if an administrative petition with respect to the taxable year has been filed, until the tax administrator's decision has become final.

(d) Waiver of restrictions. The taxpayer may at any time, whether or not a notice of deficiency has been issued, by a signed notice in writing filed with the tax administrator waive in whole or in part the restrictions on deficiency assessments and collection.

(e) "Deficiency'' defined. A "deficiency" means the correct amount of the tax less: (1) the amount shown as the tax upon the taxpayer's return (whether or not the return was made or the tax computed by the taxpayer), and less (2) the amounts previously assessed (or collected without assessment) as a deficiency, and plus (3) the amount of any rebates. For purposes of this definition, the tax shown on the return and the correct amount of the tax shall both be determined without regard to payments on account of estimated tax or the credit for withholding tax; and a rebate means so much of an abatement, credit, refund, or other repayment made on the ground that the amounts entering into the definition of a "deficiency" showed a balance in the taxpayer's favor.

(f) Deficiency explanation. All notices of deficiency shall explain the reasons why there is a deficiency together with a description of all penalties and any fines to be assessed.

History of Section. (P.L. 1971, ch. 8, art. 1, § 1; P.L. 1995, ch. 380, § 1; P.L. 1998, ch. 66, § 1.)