So you got a notice that there is a certified letter at the post office for you? Maybe you even signed for it, but since it's from the IRS, you don't open it. If it contains a Notice of Deficiency, CP 531, then what happens if you ignore it?
I am a tax attorney in Minneapolis, Minnesota. I represent taxpayers before the IRS and state taxing authorities all across the country. I deal with tax debts, audit defense, payroll tax issues, and criminal tax matters. When you ignore an IRS Notice of Deficiency, you lose your right to go to United States Tax Court and challenge the assessment after 90 days.
The Assessment basically goes final. Now, the IRS will begin collections action against you. Very quickly, you'll receive a CP 501, Billing Notice. This will be the first formal bill that you receive from the IRS. The Notice of Deficiency talked about how much you owe, but this notice really alerted you to appeal rights and told you what to do if you disagree. The Billing Notice is the IRS's first attempt to collect.
A lien arises 10 days after the Billing Notice. It might not be filed in the county property records yet, but its there. That lien attaches to everything you own right now. And, it also will attach to anything that you buy until the IRS is paid. If you owe more than $10,000 then a Notice of Federal Tax Lien might be filed to let the public know that you owe the money too.
Penalties and interest continue to accrue every day that the balance isn't paid. Eventually, you'll probably also receive another certified letter. This will be a final Notice of Intent to Levy Assets. The IRS will now be coming to actually take your money and your property. You can still make a deal with the IRS to settle the debt even at this stage.
The best outcomes begin with getting out in front of things. If you receive a certified letter from the IRS, then sign for it. The IRS isn't stopped from collecting just because you don't sign for it. Go and get it. Open the envelope and then get help from a qualified tax attorney so you can begin to solve your tax problem. Many times, you can avoid levies and the filing of a Notice of Federal Tax Lien if you start talking to the IRS and working towards a settlement.
Attorney at Law
12800 Whitewater Dr.
Minnetonka, MN 55343