IRS Collection Notices – What do they mean?

By
Services for Real Estate Pros with Backoffice Squared

I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS and Florida Department of Revenue. Typically, problems with the IRS Collections Division starts with a series of notices. Each new notice gets more threatening than the last and start to come faster and faster. It’s highly unlikely that ignoring this correspondence is going to work out for any taxpayer in the end.

 

Each of the letters will have an identifying number in the right-hand corner. Here is a summary of what these various letters mean:

  •          CP501 – Balance Due Notice – The taxpayer’s priority here is to figure out if the IRS has a case or is there an error that can be fixed.
  •          CP503 – 2nd Notice of Balance Due – Time is running out. Now is a good time to ask for more time if you are having problems with resolving the issue.
  •          CP504 – Notice of Intent to Levy – The taxpayer needs to be talking to the IRS to avoid them placing a levy on their bank accounts and wages.
  •          LT11 or CP90 – Notice of Intent to Levy – The taxpayer has 30 days from the date of the letter to avoid a levy. The best bet is usually to file a Form 12153 to request a Collection Due Process (CDP) hearing.
  •          LT14 – IRS has been attempting to contact you and will begin enforcement procedures shortly if no response.
  •          CP523 – The IRS is about to terminate a payment agreement for lack of payments
  •          LT1153 – Notice of Intent to Access 100% Penalty. This is about unpaid payroll taxes and is very serious. The IRS is in the process of deciding that you were the responsible party or one of several responsible parties that could have and should have paid the social security and withholding taxes over to the IRS. They can and will access a penalty equal to 100% of that amount to you individually. The best time to beat this is right now.
  •          LT6174-A Cryptocurrency Warning. This is a recent event in which the IRS announced that it had sent out some 10,000 of these warnings to people who might have traded in cryptocurrency. Where they got the names of who to send the notices to is an interesting question, but don’t doubt for a minute that this issue is going to get bigger in the future.

It’s never a good idea to ignore IRS correspondence. The issue will not go away once a tax has been assessed and the 10-year Statute of Limitations is open.

 

Please be aware, the IRS will not call you on the phone out of the blue or send you an email. Any such calls or emails is from a fraudster and should be ignored. The IRS Collections Division makes it initial contacts through the US mail.

 

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.

 

Jim Payne, CPA

Backoffice2

Gainesville, FL

Cell (352) 317-5692

Office (352) 376-9401

Fax (352) 376-9440

jim@backoffice2.net

https://backoffice2.net

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Jim Payne, CPA

CPA firm practicing in the area of IRS Collections
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