So you’ve received a Notice of intent to Levy from the IRS. Ugh!
I’ve helped taxpayers deal with IRS tax debt problems for years, and I've got good news and bad news.
Let’s start with the bad news around an IRS CP504 letter, and then quickly move onto the good news for you!
What it means
- You have a past due bill with the IRS
- The IRS has sent you letters before, and you haven’t taken care of it because you couldn’t pay it, you dispute it, or you’re quite not sure what to do.
- The IRS is now just one step away from freezing your bank account, taking part of your wages, or real estate commissions, business income, or property.
- You've got 30 days to respond. Use the time wisely!
Now the good news.
Don’t freak out.
Don’t overreact, though your emotions (and your spouse) may be screaming at you.
Because you can deal with this. It really is possible to put your tax problems behind you.
You can fix this directly , or you can tap a professional to deal with the IRS on your behalf
Either way I’m going to explain you how to fix this.... how to tackle this head-on, step by step.
How to respond
First step, read the notice carefully.
Yeah, I know what you’re thinking ....“thank you Dr. Obvious!"
But hold up. What I mean specifically is read the notice carefully so you can determine whether it is:
- a “Notice of Intent to Levy“, OR
- a “Final Notice of Intent to Levy and Notice of Your Right to Appeal“
Because these are two very different things.
Look at the letter number designation at the top right of the notice. It will say either CP504, which is the second to last notice before an IRS levy -OR- it will say LT11 or Letter 1058, which is the true final notice that gives the IRS authority to seize your stuff!
The CP504 is serious. It probably came by certified mail. It looks scary, feels scary. But by federal law, the IRS still can't levy at this point.
The LT 11 or Letter 1058 - the true "Final" notice that IRS levy action may be in your immediate future - is super serious.
IRS Collection personnel can now legally seize your stuff - unless you take action.
Second step, check the collection date on the lRS notice.
I’m not talking about the date at the top right of the letter.
Look down the first page of the notice. You’ll find language around the middle left side stating “the IRS may seize your property or your rights to property on or after (month, day, 202x)".
That’s the collection date by which you need to take action. You need a game plan - now!
Ignore the LT11 or Letter 1058 and you could find yourself at an ATM machine and discover no money in your account. The IRS took it!
Third step, file an appeal.
If this is truly the final notice, file an appeal. This takes your case away from the Collections Division and put it in the hands of the Appeals Division. It gives you more time to work out a solution without having the IRS levy your property.
Fourth step (assuming you cant pay in full, and don’t dispute the balance due) contact the IRS to make payment arrangements to resolve your tax debt problem.
How do I pay?
The IRS offers several programs to help taxpayers settle their tax debt:
- Installment Agreement. You set up a monthly pay plan to pay back taxes and agree to stay current on future taxes. There are many different types of IA's; the mistake taxpayers make is they agree to a monthly payment that's ultimately not affordable. This is where you can create a bigger problem than you had before.
- Offer in Compromise. You make an offer to pay the balance in part, which the IRS accepts. Then they erase the remaining portion of your tax liability!
- Currently not Collectible Status. You show the IRS that you can’t afford to pay, and the IRS agrees to put collection activity on hold.
These programs are simple to understand conceptually, but in reality they each involve a process that can be difficult to complete
It's kind of like buying a house. Three words ("buy a house")... one simple idea... but a complicated process. It's difficult to get it all done properly without the help of a real estate professional, mortgage professional, title expert, real estate attorney.
Should you get professional IRS representation?
You can get someone experienced in dealing with the IRS so that you never have to speak with the IRS again.
A tax professional who specializes in IRS representation can help reduce the amount of tax penalties and interest you owe.
Someone who can save you more in time and money then they charge you in professional fees
There are several professionals you could hire to represent you before the IRS.
- Tax attorney
- Enrolled agent
Anyone who holds these licenses can provide representation, but precious few are qualified to provide representation.
Few actually have the interest, experience and expertise to know how to deal with the IRS Collections Division.
- Most tax lawyers focus on trusts and estate work; very few in truth deal with IRS Collections.
- Most CPAs prepare Tax Returns and do Auditing work. That’s what they specialize in. Very few get involved with untangling tax debt
- Even most Enrolled Agents put all their focus on tax preparation. Less than 5% of EA's specialize in tax problem resolution.
Dealing with the IRS Collections personnel and processes is a very specialized area of practice. It's what I focus on. I find great fulfillment in helping people get a fresh start in life! (For more info on our services go to http://www.AnchorTaxRelief.com
Are you worried about the IRS leaving your bank account or filing a federal tax lien against you?
Find out what you can do to avoid these IRS collection actions by scheduling a free consultation today.
Click the link below to connect with me, and together let's see what your options are.
Jim Flauaus, EA, CTRC
Enrolled to Practice before the IRS