What Are All These Scary Letters I’m Receiving?
When you have a tax problem, your mail box becomes a very popular place. You are overwhelmed with all sorts of letter fom the IRS as well as from companies claiming they can help you deal with the IRS. Most of the companies are scams. You’re vulnerable. They know it. And they want to take advantage or your weakness.
But what about the IRS letters? You can't allow the IRS take advantage of you either. My clients often come to me scared out of their minds because they hear stuff from friends and relatives. Or worse, the scam “tax resolution” companies make up wild stuff about what the IRS will do because the scammers want these poor folks to cough up big fees.
However, the reality is that you don’t have to live in fear. The law provides limitations on the IRS. They cannot just “show up” and take your stuff. They can’t just “surprise” you by seizing your wages or bank account. The IRS cannot take your property, wages and bank accounts, until it first sends a letter making its intentions very clear.
So relax! Hopefully what I’m about to reveal to you will give you a little peace of mind. However, don’t get stressed out if this is not exactly clear to you. If you need me to explain more about how the collection process works, and your unique situation, just call me.
To the average citizen, every letter from the IRS looks scary. However, that’s not the reality. The first letters you receive are not even reviewed or written by a real human being from the IRS. A “robot” spits them out. These early letters are far different from the later letters where a real live person – usually an IRS Revenue Officer – is hot on your trail.
Okay, now don’t get me wrong. Any letters from the IRS should be taken seriously, and the sooner you get on top of things, the better you will be able to neutralize the IRS and get the tax problem resolved. I just don’t want you to push the panic button.
So here are four scary letters that will give you fair warning and time to take action before the IRS takes your property and makes your life miserable:
CP 14: Balance Due
This is the first letter sent in the collection process. No human being from the IRS reviews the letter. It’s spit out by a “robot” and it explains how much you owe, how to pay it, when to pay it, and contact the IRS if you disagree.
The CP -71 is a friendly reminder from the IRS that you owe money to them. This particular letter often signals an opportunity to approach the IRS for hardship or settlement status.
CP 501: Reminder, We Show You Still Owe
This notice regards your past due balance. In most cases, the CP501 notice is written as a reminder that your balance is due and that you need to take action. By the time you receive one of these in the mail, your taxes are delinquent according to the IRS. You'll see the tax year, the total you owe, the original balance due and the interest and estimated tax penalties that have piled up since the original due date.
CP 503: Important – Immediate Action Required
If you fail to take action after receiving a CP501 notice, you'll most likely receive a CP502 notice within five to six weeks afterward. The CP502 is more urgent, and scary, than the CP501 because it instructs you to take “Immediate Action.”
CP 504: Urgent Notice – We Intend to Levy Certain Assets, Please Respond Now
At this point, things are heating up, and the IRS is gearing up to take collection action. However, CP504 is just a scare tactic. This letter does not give the IRS authority to take enforced collection action. But you should not bury your head in the sand because you will be in a world of headaches and pain if you do not take immediately action.
These first four notices of balances due (CP 14, CP 501, CP 503, and CP 504) are sent from the Automated Collection Service or “ACS” about five weeks apart. No real human involvement occurs. These letters do not give the IRS any legal rights other than to take your state tax refund after CP 504 is issued. Occasionally, a Revenue Officer will try to tell folks that they can take property at this stage of the game, and that’s simply not true. (an IRS Revenue Officer would not dare try to tell me that – I would laugh in their face)
WARNING! Take Immediate Action
These are the letters and notices which have "teeth." This means the IRS can take enforced collection by taking your wages, bank accounts, retirement accounts and personal property. I urge you to call immediately because we can prevent the IRS from taking your property if you act on time.
CP 90 and CP 297 – Final Notice of Intent to Levy
CP 90 notifies you of your unpaid taxes and that the IRS intends to levy to collect the amount owed. It’s also telling you that the IRS can file a federal tax lien. This is often sent if you have defaulted on an installment agreement.
IRS Notice CP 91 and CP 297. Final Notice Before Levy On Social Security Benefits.
You really need to take action because if you don’t, the IRS will seize your retirement benefits, such as 15%
of your social security, as well as your 401k.
Letter 11 (“LT 11”) – Final Notice of Intent to Levy and Notice of Your Right to a Hearing
This letter is to notify you of your unpaid taxes and that the Service intends to levy to collect the amount owed. The letter and referenced publications explain how to request an appeal if you do not agree.
Letter 1058 (“LT 1058) – Final Notice Reply Within 30 Days
This letter is to notify you of your unpaid taxes and that the Service intends to levy to collect the amount owed.
Collection Due Process – The “IRS Hammer” and Your Friend
If you have received a CP 90, CP 297, CP 91, CP298, LT 11, or LT 1058, you can stop the levy by filing for a collection du
e process appeal or “CDP” within 30 days of the notice. The CDP is a powerful tool to force the IRS into negotiating alternatives to forced collection; you can even open the door to settlement or hardship or a partial pay plan. This enables you to continue to protect your wages and accounts from the IRS while you work out a solution with them.
There are major advantages to a CDP. For example, the IRS is prohibited by law from taking your property until the collection due process hearing is completed. It usually takes about 4 to 7 months to have a case assigned to an appeals officer and for your hearing to occur. You will have a real human being from the IRS who often has a resolution minded approach. Your tax attorney can meet in person and negotiate a resolution with an IRS Appeals officer who is better equipped to resolve the case than a Revenue Officer. Your attorney can discuss not just the narrow issue of a levy, but suggested alternatives to resolve the tax altogether.
The Grand Daddy of IRS Collection Notices
If you get any one of these two documents, call me right away, as in NOW! This is deadly serious:
Summons: A local IRS Revenue Officer will issue the summons. Don’t delay if you receive an IRS Summons. By issuing a summons, the IRS believes you are cooperating and you must comply with the demands or face fraud, or even criminal charges.
Summary of Contact: This is form 9297, and it’s serious because a Revenue Officer is requesting information by a certain deadline. Usually, when 9297 is issued, the IRS is trying to assess a Trust Fund Recovery Penalty against a responsible party for failing to file and/or deposit payroll tax, and this is really bad news for the taxpayer. The IRS also uses form 9297 to obtain financial records and perform a financial analysis or find sources of income to garnish.
Call Me Immediately If You have Received Any IRS Notice
I can help you. But the longer you wait, the more ugly it will get. I can tell you the number of times clients have said to me, “Mr. Mack, I wish I would have done something sooner… I would have save myself so much money and stress.” Trust me, you'll feel a whole lot better getting control of the situation rather than becoming a sitting duck for the IRS.
Call me for free at 800 659 0525, day or night.