IRS tax notices

IRS Collection Notices: What do they mean?

When an IRS letter or IRS collection notice arrives, many people are unsure what it means and what to do to respond. IRS letters all look the same, and can be intimidating because of what is at stake.

IRS tax noticesIf a person has tax debt due to the IRS, and does nothing about it, then eventually the person’s account will go into IRS collections.The collection process may take some time, up to several months. Each collection notice usually comes five weeks apart.

Different types of IRS Collection letters – What are the different types of IRS Tax Collection letters?

CP14 This notice is for when a person has a balance due

CP501 First reminder notice for the overdue balance due

CP503 2nd notice to remind a person of their balance due

CP504 Final Notice of Intent to Levy. This is when the IRS gets really serious. This notice says if the amount is not paid in full after this 3rd and final notice, then the IRS will levy the person’s state income tax refund.

CP90 This notice represents the IRS intent to seize assets and gives notification of the person’s right to a hearing. Retirement benefits, real estate, salaries, automobiles, bank accounts etc can be included in the levy

CP91/CP298 This notice represents the IRS intent to seize 15% of social security benefits to pay the unpaid balance that is due.

CP297 This notice represents the IRS intent to seize assets and is sent to the subjects business. The IRS will levy assets if no action is taken.

LT11/LT1058 This letter is the Final Notice of Intent to Levy and Notice of Your Right to Hearing. This indicates that the IRS has made numerous attempts to collect the balance. If no further action is taken within 30 days, the IRS has the right to levy or seize assets. The IRS may also place a Federal tax lien on your property.

The most important and serious IRS collection letters

CP90/297 Final Notice of Intent to Levy and Notice of Your Rights to a Hearing

CP91/298 Final Notice Before Levy on Social Security Benefits

These two notices are the only notices that allow the IRS to start proceedings in order to seize your assets, vehicles, bank accounts, real estate and business assets. The other notices can be important and urgent, but they are not threatening any action. Only these final notices gives the IRS these legal rights to start the proceedings.

When a person receives a Final Notice, he/she must realize that it provides important legal rights. These rights include the ability to file an appeal to have a hearing to settle the case and take the results to a U.S. Tax Court if it is not acceptable. The IRS collection action is halted while the appeal is pending, provided it is filed within 30 days from the issuance of the notice.

Actions to take when a person receives an IRS collection letter

Taxpayers are generally extremely anxious when they receive these types of IRS notices. The best thing to do is to stay calm, read the letter and check if it is a Final Notice. Taxpayer assets are in danger if it is a Final Notice.

If a person agrees with the balance due, look to the tax resolution with a payment plan, currently not collectible status or offer in compromise. This decision must be made quickly as active collections are taking place. The best way to get tax help is from a tax attorney who will work to get a resolution that is most favorable to you and your financial situation.

If you do not agree with the balance due, submit the required information to validate your claim.

Remember, when you submit any information to the IRS, to always keep copies for your records.  Please call for a no-cost tax attorney consultation for a tax resolution.  We look forward to helping you.  This blog post is not intended as legal advice and should be considered general information only

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