What Do These IRS Collection Letters Mean?

What Do All These IRS Collection Letters Mean?!

The IRS is the collection arm of the US Treasury. If you’ve never paid all your bills on time, you know that you will very likely get a letter asking for payment. The IRS is no different.

Collection letters from the IRS serve two purposes. One, the letter lets you know how much is due. And, two, the letter demands payment, otherwise additional interest and penalties will be added on. The IRS knows that often taxpayers don’t respond to the first notice. So you can expect a series of letters, each one a bit more aggressive in demanding action. By the end, the IRS will threaten the taxpayer with aggressive action such as a bank levy or wage garnishment.

You can see the list of the notices, with a link to www.irs.gov (which provides some additional explanation of each letter).

How IRS Collection Notices Flow

These notices follow a common flow. I can’t guarantee you will get each one or  in this particular order but this is the common sequence.

  1. CP 14 Notice Balance Due
  2. CP 501 Notice Reminder, We Show You Still Owe
  3. CP 503 Notice Important – Immediate Action Required
  4. CP 504 Notice Urgent Notice – We Intend to Levy on Certain Assets, Please Respond Now
  5. CP 90/CP 297 Notice Final Notice of Intent to Levy and Notice of Your Right to a Hearing

NOTE: If you are receiving SSA benefits then you might receive an IRS collection notice CP 91/CP 298   Final Notice Before Levy on Social Security Benefits.

What these IRS Collection Notices Mean

Don’t ignore the CP90 or CP297  notice! If you get one of these letters, you are facing real trouble with the IRS. A tax lien or tax seizure is not joke.

A tax lien can hurt your credit but worse than a tax lien is a tax seizure (called a levy). If you get hit with a tax levy, the IRS can seize money in your bank account or garnish your wages. I have received many calls right after the IRS has seized a taxpayer’s bank funds. Wouldn’t you know it, the IRS always strikes right before your rent or mortgage is due.

Not sure if you have received either notice? Look for any language in the letter which states that this is the “Final Notice of Intent to Levy.” To show you how serious these letters are, I once represented a client who had a payroll tax problem. The IRS tried to work out a payment plan but the client didn’t work with the IRS. Then one day, the IRS seized $12,000 from the client’s bank account. Not long afterward, the client’s business failed due to lack of funds to pay its employees.

Contact Us

I am Maine’s IRS Problem Solver. My firm helps Maine taxpayers in trouble. If you or someone you know in Southern Maine wants more information on how to resolve your unpaid taxes, please feel free to contact me directly at 207-502-7181 or by filing out my contact form. A Maine tax attorney can help you consider your options.

James D. Wade, Esq.

Law Office of James D. Wade

57 Portland Road, Unit 3

Kennebunk, ME 04043