Receiving a letter or notice from the Internal Revenue Service (IRS) could be very stressful. The IRS has ramped up tax collection enforcement due to the recent funding allocated to hiring more employees to collect tax due. Further, collection activities that were suspended because of the Covid-19 pandemic have resumed. Taxpayers with past tax due balance have received letter LT38 informing them that the IRS has resumed collection and the steps they should take to resolve their balance due. Generally, when there is a tax due, taxpayers will receive the following letters in sequential order until a resolution is reached:
- CP14 or CP161 – Demand for tax;
- CP501 – Balance due;
- CP503 – 2nd Notice of balance due;
- CP504 – Final Notice of balance due; and
- LT11 or Letter 1058 – Intent to Levy or Letter 3172 – Notice of tax lien.
Some taxpayers could receive Notice LT19 from the Automated Collection System when 1) there is a balance due under $50,000; 2) the taxpayers are in filing compliance; and 3) the taxpayers qualify to use the online payment agreement (OPA). Taxpayers could receive CP59 when they are required to file a return and there is evidence that they should file based on tax documents the IRS received from third parties. Taxpayers receive Notice CP2000 when they did not include income from third parties on their filed returns.
A taxpayer is in filing compliance when the taxpayer has filed a tax return for each of the last 6 years. If you are in filing compliance, you will be qualified for one or more of the relief options available, including a penalty abatement if you have not been granted a penalty waiver in the last 3 years.
As stated by the IRS, “a levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property”. However, “a federal tax lien comes into being when the IRS assesses a tax against you and sends you a bill that you neglect or refuse to pay it. The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property. You have the right to appeal if the IRS advises you of the intent to file a Notice of Federal Tax Lien”.
Hiring a tax resolution expert is the best action a taxpayer could take in a tax matter before the IRS or a state Department of Revenue.
We offer FREE initial consultation!!!
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