Get Help if You Receive One of These Notices
One of the most intimidating things that can happen to an American taxpayer is receiving a notice in the mail from the Internal Revenue Service – just seeing their name on a return address can send chills down the spine. The IRS is the agency responsible for making sure that everybody pays the taxes that they owe, and for collecting those taxes. When a notice arrives in the mail, it is generally telling you that you have either failed to pay the correct amount, or that you’re late – one or the other – but there are several different notices that the agency uses to convey this message, and each has its own special purpose.
Though there are many different forms that the IRS uses, there are some that are much more common then others. The eleven forms that are listed below are the ones that are most frequently sent out, so it can be helpful to have this guide handy to understand what each one represents.
The Past Due Tax Obligation Notice – CP501 and CP502
These two forms are probably sent out more than any other IRS notification. They inform the recipient that they owe taxes, and provide all of the pertinent information that the taxpayer needs in order to get into compliance. This information includes:
- How much they owe
- What year the tax debt is owed on
- Whether there is interest that is due on the tax debt and how much it is
- The deadline for when the tax debt is due
- What happens in case of failure to pay the cited tax debt. These penalties can include garnishment of paycheck, seizure of assets such as any real estate that or vehicle that’s owned, liens on future tax refunds and tax levies against other real property
If the IRS begins a collection process for a tax debt, it can end up leaving the taxpayer with little or no assets with which to manage their day-to-day expenses. In order to avoid this, it is possible to negotiate a payment plan or settlement. A tax professional can assist in facilitating this type of arrangement.
Reminder Notice of Tax Debt – CP71C
In many cases, a taxpayer can make arrangements with the IRS to pay off a tax debt over a period of time. When the agency has not received a payment or had any contact with the taxpayer for a certain period of time, they will send out a reminder notification by mail in order to encourage the taxpayer to resume making payments or contact them to discuss.
Reminder of The Need to Immediately Remit Payment –CP503
This is generally a second notice of the need to remit a tax payment in full. Receipt of one of these notices gives the taxpayer just ten days in which to send payment. A taxpayer who is not able to comply with this requirement should take action to contact the agency immediately in order to discuss the situation and find another solution that is agreeable to both.
Last Notice of Tax Debt – CP504
The CP504 is a letter that the IRS provides as a warning that unless payment is received, they will begin the process of collecting tax debt via wage garnishment or seizure of a tax refund. Once this notice has been received, the taxpayer faces a number of potential impacts on their federal or state tax refund until their tax debt is paid off in full.
Reminder that you have a tax installment agreement payment due – CP521
When a taxpayer has arranged a payment agreement on their tax debt, they will receive CP521 Notice. This IRS notice is notifying you that you that your monthly installment agreement payment is due by a specific date. Pay the amount due shown on the notice.
Notification of Nonpayment of Agreement and Threat of Wage Garnishment or Seizure of Assets – CP523
The IRS sends Notice CP523 to taxpayers who are in danger of losing their installment agreement. In instances where a taxpayer has negotiated a payment agreement and the taxpayer has defaulted, this notice will be sent to inform the taxpayer that the agency is about to begin the next step, which may be seizure of assets or garnishment of wages. In order to stop this process, it is necessary to respond quickly. This can be done by contacting the IRS to determine whether a penalty fee can be paid for having broken the existing agreement and whether a new payment agreement can be negotiated.
Final Notice of Intent to Levy – Letter 1058
When the IRS is about to begin imposing fines, they sent this letter out as a final notice. Within the body of the letter there is information reminding the taxpayer that the agency has the right to search for and seize assets that can help fulfill the tax debt. This may include bank accounts.
Notice of Impending Levies & Garnishments – CP90/CP297
These notices are both sent out in the form of letters that will detail what levies and garnishments are about to be imposed. Within the body of the letter there may also be information on how to request an appeal hearing using Form 12153, as well as a demand of payment in full within 30 days of receipt of the notice.
Notice of Seizure of Property and Assets – Letter 3172
When the IRS is about to proceed with the seizure of property and assets they sent notice informing the taxpayer that those assets are about to be taken and that they have a right to sell them in order to use the proceeds to meet the outstanding tax obligation. The letter also informs the taxpayer that relief from tax debt cannot be realized by filing for bankruptcy.
Release of Levy – Letter 668D
When a taxpayer’s tax debt has been satisfied, the IRS sends Letter 668D to notify them of this status. The letter is also used when the deadline for the agency to collect on a debt has expired, or when they realize that they made a mistake in garnishing wages or seizing property. A copy of this letter is also provided to financial institutions that may be involved, including the taxpayer’s banks or employer.
Notice of Proposed Adjustment – CP2000
When the IRS realizes that a taxpayer has either overpaid or underpaid their tax obligation, they send this notice out to suggest a solution.
All of the notifications listed above refer to taxpayer’s outstanding obligations and the potential penalties that the face for noncompliance. When a taxpayer receives any of these, it is essential that they take quick action in order to set things to right, or face the risk of losing their property, assets, tax refunds and wages.
Though receiving one of these notices may be intimidating, there are solutions available, and an experienced tax professional can help you find the one that is best for you. To discuss what your next best steps are or to have us represent you in discussions with the IRS, contact our office today.
If you're having IRS Tax Problems, let a professional help you resolve it. Call 818-925-9959 for a free consultation.