When you receive an envelope from the Internal Revenue Service (IRS) it is natural to feel tension, fearing what is inside. The IRS has about 75 different notices and letters they send out for various reasons. The IRS notice may be a request for additional information, notification of an audit, a notice of unpaid taxes, or notice of a levy against your assets.
For the 2020 tax year, the IRS conducted 509,917 tax return examinations, which led to recommendations for the collection of an additional $12.9 billion in tax. In addition to that, the IRS assessments included $3.9 billion from 942,155 cases in the Automated Underreporter Program. An additional $5.6 billion in assessments came from 662,611 cases in the Automated Substitute for Return Program.
Do not ignore notices from the IRS and never underestimate their power. They have no limitations on their ability to garnish your wages or take your assets for taxes due. If you follow proper procedures you can challenge their claims for additional tax payments.
If you are holding an IRS notice in your hands keep calm and read on. We are going to explain the different types of notices you may receive, what they are, and how to respond.
What Is a CP14 Notice From the IRS?
A CP14 means you owe Uncle Sam some tax money. An IRS CP14 notice is the first contact sent advising a taxpayer they have unpaid taxes due. The notice is usually several pages long and includes information regarding:
If you agree with the IRS assessment, pay the outstanding balance as quickly as possible. If you are not in agreement with the IRS claim, you will need to file an appeal. Follow the IRS appeal instructions carefully.
In January 2021 the IRS began using an alternative to this notice, which is IRS Notice CP141A. While the original letter simply advises you of the balance due, the new CP141A includes the notice plus an installment payment agreement.
If you are in agreement you may follow the steps necessary to complete the payment plan agreement. Pay all installments on time to avoid having the agreement canceled.
If you are not in agreement with the IRS assessment on the CP141A do not make any payments. You will need to begin the appeal process with the IRS. Your tax attorney will also know the hardship steps to follow if you owe the tax but cannot afford the payment the IRS is requesting.
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IRS Notice CP15
When you receive a CP15 Notice you are in receipt of a civil penalty charge from the IRS. The reasons for this assessment include:
This notice goes to the business and employer business taxes are imposed on the responsible person. The person is whoever within the company is responsible for the Trust Fund Recovery Penalty. It is a penalty for failing to pay employment or excise taxes.
You have the right to file an appeal. You must provide compelling evidence to overturn this determination. If you are disputing the claim, you must pay the penalty and if you win the appeal you may then file a claim for a refund.
IRS Notice CP49
This notice advises you that the IRS is applying your refund to outstanding taxes. This notice is sent “after the fact,” meaning the IRS has already seized your return to satisfy the outstanding debt. It is sent if the back taxes were already assessed but remain due because of a refund you received on your last tax return.
The IRS is avoiding the time it takes to bill you and handle the paperwork necessary to put you on a payment plan. This is done to make it easier on them. The IRS made a mistake by sending you a refund in the prior year, so now they took your current tax refund without notice.
If you receive this notice request a copy of the IRS file to compare your records. This allows you to confirm whether the IRS assessment is correct.
IRS Notice CP90
When you receive a CP90 Notice you need to take immediate action. This is a notice of the IRS intent to levy. This means they plan to take your property and assets, including your retirement benefits, salary, real estate, automobiles, bank accounts, and more.
If you want to appeal the IRS determination, you need to file Form 12153, Request for Collection Due Process Hearing, within 30 days of the notice date. Send the appeal to the address on your CP90 notice.
Upon receipt of your appeal, your case will move from IRS collections to appeals. During the time of the appeal, which is usually 3-6 months, you will have additional time to gather funds for paying the outstanding taxes. Be aware that interest will continue to accrue during the appeal process.
If you do not respond using the proper forms the IRS may seize up to 90% of your wages and bank account balances.
You may also receive IRS Notice CP91, which is similar. The CP91 is a notification that the IRS is planning to take 15% of your Social Security for unpaid taxes. The garnishment of your Social Security will begin 30 days after the notice date.
IRS Notice CP92
When you receive a CP92 notice the IRS is advising you that they levied your state tax refund for the payment of outstanding federal taxes. If this happens you have the right to a Collection Due Process Hearing. You must file Form 12153 prior to the date on your notice.
This is a situation where you want to consult with a tax attorney prior to filing an appeal. If you file an appeal you are also extending the statute of limitations for all other actions the IRS may decide to take, even if you win the appeal.
This notice may also result in actions pursuant to the Fixing America’s Surface Transportation (FAST) Act legislation. This act requires your state to take action against people who have delinquent tax debt. This includes denial of a new passport, denying renewal of a current passport, or having your passport revoked.
IRS Notice CP501
This is the first notification you receive regarding an outstanding tax balance. The IRS will not seize any of your property at this point. You do need to remedy the situation.
If you agree with the outstanding amount, you can pay the balance. If you are unable to pay the amount in full, you may submit an application requesting an installment payment plan. Interest and penalties continue to accrue until all tax is paid.
If you do not agree with the IRS tax assessment, you need to appeal the assessment following the IRS appeal procedures. If you do not file an appeal or make payment, the IRS will file a Notice of Federal Tax Lien.
This is a public notification to your creditors that the government is exercising its right to confiscate your assets. This includes assets you currently own and those you acquire after the filing of the lien. This may impact your ability to get credit in the future.
If you do not take action you will likely receive IRS Notice CP503 and IRS Notice CP504 or IRS Notice CP504B. These are follow-up notices to the original letter.
If no response is made to the CP504 or CP504B notice, the IRS will take your assets within 30 days of the notice. This includes seizing your bank accounts, garnishing your wages, and filing a federal tax lien.
When you receive any of these notices, the best action is to schedule a consultation with experienced tax attorneys. They understand the steps necessary whether filing an appeal or determining the best way to pay your outstanding taxes.
IRS Notice CP2000
This is a common notice many taxpayers receive from the IRS. This notice is sent if there is a difference between the income you report on your tax return and what the IRS receives from your employer, bank, or another payer.
The notice will advise you of what adjustments the IRS is proposing to make. It will let you know the information they received and its effect on your return. The response form that accompanies the notice will let you know what response options you have.
If you agree with the changes the IRS is proposing, follow the instructions to sign and return the form. If this is a joint return with your spouse, both of you must sign the form.
If you are not in agreement with the determination, submit a statement explaining the reason you disagree. Include with your statement documentation supporting your position.
If the information a business sent to the IRS is incorrect, contact that business. Request they provide you with a corrected document or statement stating the amount was in error and the reason it is wrong. Submit a copy of that information with your response.
IRS Letter 2205
This letter carries the number 2205-A if you are an individual and 2205-B if you are a business. The notice is that you are being audited. The letter will include the examiner’s name, office location, and phone number.
The letter will state what portions of your return are being reviewed and what documents they are requesting. You must call and schedule an audit appointment and take all items they request to the appointment.
You have three options when you receive this letter:
The notice deadline is within seven (7) days of the letter date. If you miss that deadline the IRS may not allow the items you are disputing and will assess penalties, interest, and additional tax.
IRS Letter 3219
This is a letter advising you that you have underpaid and owe additional taxes. The notice of deficiency will show the amount you owe. It allows you 90 days to file a petition with the Tax Court if you are not in agreement.
If you are in agreement with the determination, you need to pay the balance in full. You must sign and include Form 4089, Notice of Deficiency Waiver, to the IRS with your payment. If you do not return the form, the IRS will send you a bill that includes interest and penalties added to the amount due.
If you do not agree and have additional information to provide supporting your position, immediately mail it to the address on your notice. Keep a copy of all documents for your records. Submitting additional documentation to the IRS does not extend your deadline to petition the U.S. Tax Court.
The U.S. Tax Court is a federal trial court that is not connected to the IRS. This is a special judicial authority created for the purpose of overseeing disputes between taxpayers and the IRS. The court is based in Washington D.C., and judges preside at trials in 74 cities throughout the United States.
This is a federal legal proceeding. If you plan to proceed to this level you need a tax attorney with experience in this special area of law. When appearing you must follow the Federal Rules of Civil Procedure and know all laws and rules pertaining to the U.S. Tax Code.
IRS Form LT11 and IRS Letter 1058
These are two different terms referring to the same notice from the IRS. The two terms are sometimes combined into IRS Form 1058 by people who are unfamiliar with IRS notices. This is a notification that the IRS has not received your overdue taxes and if you do not take action the federal government is able to seize your property.
This includes seizure of your vehicles, freezing your bank accounts, and taking other assets you have. They may even seize your small business to recoup the taxes you owe.
The better solution is to enter into an installment agreement if you owe less than $50,000. If you owe a higher amount you may want to contact qualified tax attorneys who can assist you in preparing an Offer in Compromise.
Take Action When You Receive IRS Letters and Notices
If you receive any IRS letters or notices, contact a tax professional here at Silver Tax Group. Our attorneys have experience in handling all kinds of tax problems. We will work to stop IRS wage garnishments, prevent the attachment of levees against your bank accounts, and keep the tax payments and penalties from spinning out of control.
If you are just receiving your first notice or your attempts at self-representation have you drowning in legal and IRS terminology, contact Silver Tax Group. We will sit down with you, answer all your questions, and let you know what we can do to help.