When you file your tax return and you don’t pay the tax due with the return, the IRS is going to “assess” the tax, and immediately begin collection. The collection process starts with computer generated notices. If you ignore the computer notices long enough, people from the IRS get involved, and it can get nasty.
In general, there are five types of notices that you may receive from the IRS, starting with harmless computer notices and evolving into aggressive collection:
- Reminder—You Have a Balance Due, or CP 501
- Important—Immediate Action is Required, or CP 503
- Urgent—We Intend to Levy on Certain Assets. Please Respond Now, or CP 504
- Final Notice of Intent to Levy and Notice of Your Right to a Hearing, or CP 90
- Summons or Subpoena – The IRS may issue a summons to compel your cooperation with an IRS investigator, including giving testimony or providing records. If you receive a subpoena or summons, CALL a lawyer!
The first three notices do not involve a person from the IRS. These notices are strictly computer generated. However, by the time collection gets to the Final Notice it’s no longer being handled by a robot, and it’s advisable to consider hiring an experienced tax lawyer. The IRS is going to start garnishing wages and seizing bank accounts and filing public tax liens against real estate and other property. It can really get ugly from this point forward.
If you fail to take action, you could end up in a world of hurt, and in some cases taxpayers are charged with criminal conduct. To learn more, check out our free book, How to Get Tax Forgiveness.