IRS Collection Notices: What Do They Mean?
My firm focuses on taxpayers in Portland, Maine with IRS tax problems. I frequently receive calls from panicked taxpayers regarding IRS collection notices they received in the mail. The person on the phone is deeply concerned, afraid of what the IRS may do. All of which plays right into the IRS’ hands. Fear is IRS' best weapon – it motivates the person to pay his or her taxes, even if it isn’t always in the taxpayer’s best interests.
These IRS collection notices serve two purposes: (1) inform taxpayers of their rights and (2) to demand payment. The first and subsequent notices come regularly, often 4-5 weeks apart, with each subsequent notice promising more aggressive action by the IRS to collect the tax debt.
Here is the normal flow of IRS collection notices:
1. CP 14 Notice Balance Due
2. CP 501 Notice Reminder, We Show You Still Owe
3. CP 503 Notice Important – Immediate Action Required
4. CP 504 Notice Urgent Notice – We Intend to Levy on Certain Assets, Please Respond Now
5. CP 90/CP 297 Notice Final Notice of Intent to Levy and Notice of Your Right to a Hearing
NOTE: If you click on the notices you can go to the IRS website and read more about each particular notice.
What Do the IRS Collection Notices Mean?
The first four IRS collection notices are informative in nature. The IRS wants you, the taxpayer, to know how much you owe and that the IRS expects you to pay. These notices also inform the taxpayer that if payment is not forthcoming that the IRS is going to use more aggressive collection tactics such as IRS bank levies and wage garnishments.
It is the last IRS collection notice labeled “Final Notice of Intent to Levy” that you need to be concerned about. Once you get CP 90/297 you can expect the IRS to do a bank levy or wage garnishment. The IRS may also seize your home, vehicles or business assets but that is less likely. No longer is the IRS seeking to inform the taxpayer, the IRS is now in tax collection mode and you can expect more aggressive action on the part of the IRS to get the taxes paid.
Why is all of this important? The answer is that if you get an IRS collection notice marked “Final Notice of Intent to Levy” you need to act. Previously the IRS has been passively trying to get you to pay your taxes. Now the IRS means business! I will talk about what you can do in a future post.
If you or someone you know in the Portland, Maine area has received an IRS collection notice, please feel free to contact me directly at 207-299-0515 or by filling out my contact form.
James D. Wade, Esq.
Law Office of James D. Wade
53 Exchange St., Ste 400
Portland, ME 04101
Hopefully not for any of the fine folks here (fingers crossed!). Good information if you have someone who is buying or selling a home and is dogged by IRS debts.
Thanks for the feedback!