If you have a tax problem, I bet you have been bombarded with "love letters" from the IRS... some letters reminding you to pay your unpaid taxes, some reminding you to file, some wanting information, and some wanting you to call them. Yikes. Perhaps some letters are even more sinister: demanding payment by a deadline, threatening to levy your bank account or threatening to seize assets. Undoubtedly, every letter is scary when you owe the IRS and just not knowing what is coming next can be unnerving. What you may or may not know is some IRS threats are serious, and some are merely scare tactics. How is a person to know the difference?
Here’s some little-known “secret” information about how to tell which IRS letters really require your urgent attention.
- Final Notice of Intent to Levy: The Internal Revenue Code stipulates that the Service must notify a taxpayer of intent to levy prior to a levy.
Oftentimes, the IRS will issue "Notice of Intent to Levy...Intent to seize your property or rights to property". This is called a CP504 letter. This is a scare tactic. This letter does not have teeth and the IRS cannot seize property unless a "Final Notice" has been issued. But don't continue to bury your head in the sand just because this letter does not have teeth. Instead, if you receive a CP504 letter, you are heading down the path to a levy, and it is best to start taking action NOW before it gets too out of hand.
On rare occasions the IRS will not even send a Notice of Intent, and will instead just issue a Final Notice of Intent to Levy. If you receive a Final Notice of Intent to Levy...seek help immediately! A levy is imminent.
- Summons: The IRS will issue a Summons only when a specific local IRS employee is working the case. This will either be an IRS Revenue Officer or an IRS Revenue Agent. This is not something to mess around with or put off until the last minute. It's serious business. Typically a Summons is issued when an IRS employee feels that the taxpayer is not being compliant in requests for information (see Summary of Contact below) or is believed to be withholding or falsifying information. If you have been issued a Summons, seek help immediately!
- Summary of Contact: If you receive a Summary of Taxpayer Contact from the IRS, you have received a form 9297. A form 9297 is serious because a Revenue Officer is requesting information by a certain deadline. When they issue a 9297 one of two things is happening: 1.) They are trying to assess the Trust Fund Recovery Penalty against a responsible party for failing to file and/or deposit payroll tax (very serious)... or 2.) They are trying to obtain financial recordss to perform a financial analysis or find sources of income to garnish. Seek help immediately! DO NOT IGNORE A FORM 9297. If you are open for a levy and you miss the deadline, the IRS will not hesitate to seize your income. Call me immediately!
Warning: If you have received ANY of the above letters, you do not want to handle this yourself. You may end up disclosing, or not disclosing something that will only hurt you; hiring a qualified tax lawyer upon receipt of these letters can help make sure that whatever happens is in your best interest...not the IRS' best interest.
Here are some of the letters you may get from the IRS if you are in their collections system, from Cold (barely on the radar) to Smoldering Hot (requires immediate attention). Check out the links to learn more:
- CP14 - Not too scary (Cold).
- CP501 - Still pretty cool (Getting warmer).
- CP503 - Getting warmer still
- CP504 - Getting uncomfortable
- Letter 1058/LT11 - (Final Levy Notice)—Smoldering hot—act now or lose your due process rights (your right to a hearing and a stop of collection)
- CP90/CP91 - Another type of Final Notice of Intent to Levy (Smoldering hot)
- CP71 - 10 Day Final Notice of Intent to Levy. You have already received a Final Notice more than 6 months ago. Act now!