In most cases, there are going to be four main notices provided to taxpayers by the IRS collections division. These notices are provided because the IRS is required to notify the taxpayer of the actions they are planning to take. It should be a relief to the taxpayer to know the IRS cannot operate in the dark and take punitive actions against the taxpayer without their knowledge. Before the first garnishment or levy action is taken, the IRS will usually have made multiple mail contact to the taxpayer informing them of the exact actions they are about to take; however, if the taxpayer does not open their mail, the actions taken against them might be a surprise. That is a topic for another day. While it might cause some discomfort if you receive a letter from the IRS, open and read what it has to say. Do not put it in the pile of unread mail that will never be opened. This will just lead to more issues later.
The four types of common collection notices are as follow:
- With this notice, the IRS is indicating you have a balance due (money that you owe the IRS).
- Link to example notice: https://www.irs.gov/pub/notices/cp501_english.pdf
- This letter is a second reminder letter that you have an outstanding tax balance.
- Link to example notice: https://www.irs.gov/pub/notices/cp503_english.pdf
- The goal of this notice is to let the taxpayer know of the IRS's intent to levy. The letter basically indicates that if the taxpayer does not pay the balance due immediately, the IRS will seize your assets (levy bank accounts, garnish paychecks). This is also when the taxpayer can and should request their collection due process hearing.
- Link to example notice: https://www.irs.gov/pub/notices/cp504_english.pdf
- This is the final notice from the IRS prior to it taking levying assets. The notices usually includes a date for which the action will take place.
- Link to example notice: https://www.irs.gov/pub/notices/lt11_english.pdf
The IRS has other types of notices; however, these are the ones that most people will receive during the collections process. Receiving a notice from the IRS should not initially be a cause for concern. In most cases, you should know what the notice includes if you had a balance that you have not paid or have not filed a return. Receiving the notices should spur actions of reaching out to a tax professional for assistance. The worst mistake a taxpayer can make is not reading the notices and taking proper action. While you might not be able to pay the tax debt in full, a tax professional can assist in setting up an installment agreement or an offer in compromise (if you qualify).
Taxpayers need to know and understand where they are in the collection process. The notices listed above give a step by step play of what steps the IRS is taking to collect the back taxes. Also, with all of these notices, a taxpayer has no excuses for getting to the point where they receive an LT11 notice.
Bring Your Case to Our Team
At Napoleon Law Firm, our attorney routinely represents taxpayers in IRS civil tax cases located in Memphis and Jackson Tennessee; Southhaven, Horn Lake, Olive Branch, and Oxford Mississippi; and, West Memphis Arkansas. Because he is a licensed attorney, he can represent IRS cases across the country. Have you received one of the notices discussed above? If so, please feel free to contact me at (901-335-4541) or [email protected] to discuss how best to resolve your case.