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Understanding What A Certified Letter From the IRS is and What Their Notices Mean:
We’ve listened to countless clients tell us their stories about how difficult it was to make any type of arrangement for resolution with the government. The truth is, communications are typically only sent by certified letter from the IRS and notices making it hard to communicate. The longer you take to respond, the more aggressive these notices become. Many of our clients become aggravated by the number of notices they receive and do not understand the meaning behind each one. It becomes easy to ignore the constant stream of letters however over time, if the tax debt goes unpaid, the federal government automatically escalates the account. Furthermore, as the liability nears expiration, the taxing authorities will attempt to use more threatening tactics to collect. Below are some of the notices the government will send, in order, throughout the collections process.
Collection Letters That Result in a Certified Letter from the IRS:
668(Y) This is an official Notice of Tax Lien. The government will give you 30 days to contact them to settle your delinquent tax debt.The longer you wait, more letters will follow.
CP-501 This is one of the most common notices sent out. This notice is to alert you of your past due taxes owed along with the due date. We recommend to start on an installment agreement before more notices follow.
CP-503 This is the second notice that will come if the CP501 was not responded to. The IRS still shows an unpaid balance and you have 10 days to pay the balance or additional penalties and interest will be added.
CP-504 This is your initial Notice of Intent to Levy. You have an unpaid amount due on your account. If you do not pay the amount due immediately, the IRS will seize (levy) your state income tax refund and apply it to pay the amount you owe. The government will also start considering additional collections methods through other assets.
Letter 1058 – This notice comes after the CP-504. It is a Final Notice of Intent to Levy. You have 30 days before the levy will take place. It will also explain what types of assets the government use as sources of collecting your tax debt. If you have a 401K, IRA, retirement account, bank account, or property, you need to get protected immediately.
CP-521 This notice is a reminder that you have a tax installment agreement payment due.. It will give you a breakdown of your liability, but also give the date you must remit payments on. Make sure to send the payment in before the due date to stay in good standings.
CP-523 This is an official notice that you have defaulted your payment plan and the IRS intends to terminate your installment agreement. If you do not take action, the IRS may seize (levy) your wages and/or bank accounts. You should re-establish a new agreement within 30 days to avoid unnecessary hardship.
