Long Island Tax Resolution Services

You are here: Home / Archives for IRS TAX PROBLEMS / Notices

Notices

by

The 11 Most Common IRS Collection Notices

The IRS uses a series of notices to collect back tax debt from delinquent taxpayers. While these notices first tell taxpayers of the balances due, they lead increasingly to stronger enforcement action. The IRS uses these notices to warn taxpayers about wage garnishments, bank levies and tax liens.  It is a serious mistake to ignore any IRS collection notice. If you have received an IRS collection notice, you should immediately an experienced IRS tax specialist in your local area. These professionals have the experience to examine your circumstances and then develop a suitable tax relief solution for you. It is important to realize that ignored tax problems only worsen and get stressful over time. These tax problems will never go away unless addressed. Below is a descriptive list of the 11 most common IRS collection notices:

Important IRS Notice Envelope

CP 14 – Preliminary IRS Collection Notice

This non-urgent notice tells the taxpayer of a past due tax debt.

CP 49 – Notice of Tax Refund Seizure

The IRS takes your tax refund to pay for prior taxes due.

CP 501 – First Notice From Automated Collection System

This is the first urgent notice. Future notices will become more threatening.

CP 503 – Final Notice Before Notice of Intent to Levy

This notice tells the taxpayer about the seriousness of the tax problem and needs immediate action.

CP 504 – Notice of Intent to Levy

This IRS notice is serious. The IRS will seize property once 30 days have elapsed. Wages and bank accounts are the most common.

CP 523 – Notice of Installment Agreement Default

This is another dangerous IRS notice. The IRS is familiar with the taxpayer’s finances. They can easily seize property after 30 days has elapsed.

CP 90 – Notice of Intent to Seize Property

This notice is similar to the CP 504 Notice.  Wages and bank accounts are the most common targets.

CP 91 – Notice of Intent to Seize Social Security Benefits

The IRS can seize 15{bf3da7fb6a4d0e0e3790d09a79b980fc065e33e2f3a2d49280f7e95b82f4982b} of benefits. This could lead to financial hardship for taxpayers on a fixed budget.

CP 668 Y(c) — Notice of Federal Tax Lien

The IRS fixes it’s position among your creditors by filing a tax lien at your local county office.  The lien gives the IRS an  interest in a taxpayer’s property. This can include real estate.

CP 668 A(c) — Notice of Federal Bank levy

The bank will hold your money in escrow for 21 days before they give it to the IRS. The taxpayer should consult with  a tax relief specialist immediately.

CP 668 Y(c) — Notice of Federal Wage Garnishment

The IRS can take a significant chunk of your wages.

by

How To Deal With IRS Notice CP 504

The IRS sends out millions of notices to taxpayers every year. IRS Notice CP 504 (Intent to Levy), delivers a stern warning to taxpayers with tax debt: “Urgent!! We intend to levy on certain assets. Please respond NOW.” If not responded to, the IRS can begin seizing assets such as automobiles, bank accounts, investment accounts, wages, state income tax refunds and more.

Long Island Help For IRS Notices

The tax code limits what the IRS can seize from taxpayers. There are assets allowances for personal property and tools used in a trade or business. Also there are limits for the following expense categories: housing, clothing, transportation and others.

The IRS applies these tax code limits to calculate what the taxpayer can pay. This is the taxpayer’s Reasonable Collection Potential. The numbers provided by the taxpayer on the IRS financial disclosure forms feed this calculation. A taxpayer working with a tax resolution specialist will know their Reasonable Collection Potential. They will know precisely the limits of what the IRS can seize.

It is good idea for the taxpayer to prepare for such seizures on receiving the CP 504 notice. It is important to analyze all relevant information and then choose the right strategy. It is often possible to resolve a tax dispute before any asset seizures take place.

  • The taxpayer should examine the IRS CP 504 notice to find out the precise issues in dispute. Few taxpayers will even take the time to see what the notice is saying. The basis for the notice might be as simple as a math error, or something more serious like a missing tax return or overdue payment.
  • The next step is to ask for the IRS taxpayer files. Electronic IRS files known as “transcripts” provide valuable information about each taxpayer. Also, the taxpayer’s administrative file contains more details. The Freedom of Information Act entitles the taxpayer to this file.
  • If the taxpayer agrees with the IRS assessment of taxes owed, then an installment agreement is probably the best alternative. The taxpayer negotiates a monthly payment which minimizes interest and penalties, while leaving enough for monthly living expenses. Planning will help the taxpayer choose a payment plan that fits their finances best.
  • However, if the taxpayer does not agree with the IRS assessment in CP 504 notice then an immediate appeal may be the best course of action. The IRS may have already decided (rightly or not) the taxpayer owes back taxes and begun collection. The IRS will give the taxpayer a hearing to explain why further collection action should not occur.