Types of IRS Collection Notices | IRS Legal Defense
This article will review the various IRS collections notices a taxpayer might receive.
IRS Unpaid Tax Notices
The five types of unpaid tax notices you have likely received, that is causing you to research hiring an experienced IRS tax defense lawyer are: an IRS balance due notice; IRS important notice; IRS urgent notice; IRS refund levy; and a final notice - IRS intent to levy letter. Each are discussed in more detail below.
Balance Due Notice (CP-14)
If you file a tax return without paying the proper taxes, the IRS will first send a balance due notice on form CP14. All the IRS is doing is telling you what you owe on your recently-filed tax return. If the taxpayer doesn’t pay any or under-pays, the IRS balance due letter will be arriving shortly - letting the taxpayer know how much to pay, and when it must be paid. It also provides instructions for how to make a payment plan if unable to pay the full amount owed.
Do I owe interest or penalties once I’ve received an IRS balance due notice?
No. If you pay the full amount owed by the due date listed on the IRS Balance Due Notice, the IRS will not assess any penalties or interest on top of the actual tax owed. However, interest adds up after the date listed on the “IRS balance due notice” (CP14).
Important Notice (CP-501)
If you don’t pay the taxes owed, as shown in the balance due letter, the IRS, in short order, will send out an “important notice” on form CP501. The verbiage will be similar to that found on a CP14, except with slightly stronger language.
Do I owe interest or penalties once I’ve received an IRS Important Notice?
Yes. Interest will be tacked onto the outstanding balance until the taxes owed are paid in full. The IRS important notice will include a penalties section, which may be included as well. Talk to your IRS tax problem lawyer to discuss how to remove the IRS penalties.
If the taxes remain unpaid, in about 35 days you’ll receive an IRS urgent notice.
Urgent Notice (CP-503)
The IRS sends out an urgent notice letter as another reminder that the taxpayer still owes the IRS money and that it should be paid within 10 days or additional penalties and interest will be added. If there is still no payment on taxes owed, then the IRS sends out a CP504 / Refund Levy
Refund Levy (CP-504)
The IRS is informing the taxpayer that they intend to levy and will begin searching for assets on which to issue a levy. A Federal tax lien may also be filed to levy against:
- Bank accounts
- Business assets
- Personal assets (car/non-homestead homes)
- Social security benefits
Receipt of an IRS refund levy notice is not the time to bury your head in the sand. It's time to reach out to an IRS debt lawyer right away.
Final Notice - Intent to Levy (Letter 1058 or LT11)
If you still haven’t responded to any of the above IRS letters, the IRS will issue Letter 1058 or LT11. At this point interest and failure to pay penalties are accruing and the IRS is about to commence its collections process.
Letter 1058 or LT11 will advise the taxpayer of their right to appeal/hearing - this is referred to as a Collections Due Process hearing (commonly referred to as “CDP”).
This notice will be sent 30 days before the IRS actually commences any attempt to levy. So if you have waited this long to get a lawyer to help with your IRS problem, wait no longer.
You want an IRS debt lawyer to help appeal the matter at this point because the IRS will not levy while the appeal is pending.
IRS Notice of Federal Tax Lien Filing (Letter 3172)
IRS Letter 3172 is sent out within 5 days of a federal tax lien actually being filed against the taxpayer. You may be asking: “why don’t I get a ‘final notice’ of the government’s intent to file a tax lien as I might with a 1058 notice of intent to levy?” This is different than the IRS’s notice to levy because this letter is sent only after the IRS has filed their tax lien.
The IRS’s position is that they have already given the taxpayer notice that they have been deficient in paying owed taxes. They also view the filing of a federal tax lien as simply a protective measure not an IRS collections action (since it does nothing to actually take money from the taxpayer) it only protects their right to do so in the future.
IRS Statutory Notice of Deficiency
The IRS Statutory Notice of Deficiency (your tax lawyer may refer to it as a “NOD,” “Stat Notice,” or “90 day letter”) is a very important notice to bring to your IRS tax help lawyer because it sets forth the IRS’s position on what you, the taxpayer, actually owes the IRS. An actual dollar amount will be provided on the IRS notice of deficiency. If you disagree with what the IRS believes you owe in taxes, the notice of deficiency provides that you have 90 days to file a tax-court petition.
When a tax-court petition is filed, you don’t actually go directly to tax court (usually). Rather the tax court will likely refer the matter to the IRS tax appeals division for handling by an IRS appeals officer. IRS tax appeals tries to get matters resolved to prevent them from having to go to actual tax court.