Charles T. Dillon Maryland Tax Attorney (410) 321-7696
IRS Notices
The IRS has been sending me letters. I'm concerned. What do they mean?
IRS Notice CP 503 - Important – Immediate Action Required
An IRS Notice CP 90 letter is a VERY SERIOUS formal notice. The IRS sends it to individuals when previous notices about unpaid taxes have gone unheeded. (Businesses instead receive an IRS Notice CP 297 letter, which is discussed in more detail below.) This notice serves as your formal notification that in 30 days the IRS is legally authorized to begin levying your assets! DO NOT IGNORE THIS LETTER! After sending you this notice, the IRS has the legal right to take your assets. If you fail to take appropriate action within 30 days, the IRS will have the legal authority to seize your income, retirement proceeds, property, bank accounts, and other assets.
If you don’t agree with the notice or can’t pay the amount in full by the allotted time, you must appeal by using IRS Form 12153, Request for a Collection Due Process or Equivalent Hearing. To successfully appeal you case, properly preparing for your appeal hearing in essential. It is an absolute must that you be prepared to argue legitimate tax-based reasons for not owing the balance. General objections are an insufficient basis for winning any IRS appeal. Appealing your IRS tax case also usually provides you an additional three to six months of extra time. Interest, however, on unpaid taxes will continue to accrue during the appeals process.
IRS Notice CP 297 - Final Notice of Intent to Levy and Notice of Your Right to a Hearing
The IRS Notice CP 504 letter is the final notice that you have a balance due on your tax account. It also means that the IRS has previously sent you notices about this unpaid tax balance, and notifies you of the IRS’s intention to levy or take your state income tax refunds as payment for this tax liability. In addition to notifying you that the IRS intends to levy your state income refunds as payment for this tax liability, the IRS Notice CP 504 also informs you that the IRS may be searching for other assets of yours as well as may issues a future tax lien on your property.
IRS Notice CP 14 - Balance Due, No Math Error
IRS Notice CP 504 - Final Notice - Balance Due Notice - Notice of intent to seize (levy) your property or rights to property
IRS Notice CP 90 - Final Notice of Intent to Levy
The IRS Notice CP 501 is the first reminder notice that you have a balance due on an IRS tax account. This letter also means that the IRS has previously sent a notice about this unpaid tax balance. It also alerts you of the possible collection actions the IRS may take against you if the tax balance is not paid within 10 days.
The IRS Notice CP 14 letter informs you how much in underpaid taxes the IRS believes you owe. If you disagree with the stated balance due on your IRS account, you need to promptly respond to the IRS and explain/substantiate the factual basis for your disagreement.
An IRS Notice CP 297 letter is a VERY SERIOUS formal notice. The IRS sends it to businesses when previous notices about unpaid taxes have gone unheeded. (Individuals instead receive an IRS Notice CP 297 letter, which is discussed in more detail below.) This notice serves as your formal notification that in 30 days the IRS is legally authorized to begin levying your assets! DO NOT IGNORE THIS LETTER! After sending you this notice, the IRS has the legal right to take your assets. If you fail to take appropriate action within 30 days, the IRS will have the legal authority to seize your business property, bank accounts, and other assets.
To avoid losing your assets to IRS seizure, you should respond and/or pay within 30 days. If you don’t agree with the notice or can’t pay the amount in full by the allotted time, you must appeal by using IRS Form 12153, Request for a Collection Due Process or Equivalent Hearing. To successfully appeal you case, properly preparing for your appeal hearing in essential. It is an absolute must that you be prepared to argue legitimate tax-based reasons for not owing the balance. General objections are an insufficient basis for winning any IRS appeal. Appealing your IRS tax case also usually provides you an additional three to six months of extra time. Interest, however, on unpaid taxes will continue to accrue during the appeals process.
IRS Notice CP 501 - Balance Due Reminder Notice
You should never ignore an IRS Notice CP 503 letter because it is considered a final notice. This notice informs you that a balance is due on your IRS account and that you have 10 days to pay in full the balance due. This is the third notice letter the IRS will send you regarding your unpaid tax balance. You most likely already previously received the above-described IRS Notice CP 501 letter. Your receipt of this IRS letter means that the IRS’s records indicate that you failed to respond to the previous IRS letters sent to you and/or that you failed to otherwise take proper action. The IRS Notice CP 503 letter is more intimidating in its tone that previously sent IRS letters and states you only have 10 days to make a payment toward the tax balance owed.
Many clients nervously call me after they are contacted by the IRS. Usually they are referring to receiving one or more letters from the IRS, fortunately not a personal visit to their home or business by an IRS Revenue Officer or IRS Special Agent. In these cases, I always ask for them to email, fax, or take a photo and text me a copy of their most recent IRS letter. Reading this letter allows for me to immediately understand where along the IRS collection process they find themselves. Also, while it is very important to remember that every letter from the IRS is serious and should be treated so, it is also true that certain letters sent by the IRS are much more time sensitive than others. By failing to timely respond to such letters, you can experience devastating consequences. The IRS sends collection letters in this order: