The IRS Collection Process & What To Expect

I was considering how my clients feel when they receive a letter from the IRS and the turmoil they are in so I thought I’d explain some of the letters to you.

Keep in mind the IRS won’t start collection activity against you because you didn’t pay your taxes with your tax return.

If you have received one of the following letters you can email me with questions at david@yourtaxcare.com or call (865) 363-3019 for a free expert consultation.

If you can’t pay your taxes with your return you will receive a letter from the IRS which is commonly referred to as the 21day letter.  The letter is called a Statuary Notice of Deficiency letter and is automatically generated by the IRS computers.  The letter will usually have CP 14 somewhere at the top of the letter.  If you’ve filed your return by April 15th and didn’t pay the taxes, you will normally receive this letter in 60-90 days.

The IRS will not charge you penalties or interest if you pay your taxes within 21 days of receiving this letter.

You may also receive a CP 2000 letter that states the income or payment information they have on file doesn’t match the information reported on your tax return.  Make sure you complete the Response form or follow the instructions if it’s not included.  Contact the person or company that you feel incorrectly reported the income or payment and ask them to send you a corrected statement and send a copy to the IRS.

So at this point paying your taxes is your best option if you agree that you owe this tax amount. 
If you don’t pay your taxes within the 21day period, set up a payment plan, or if you disagree with the tax liability.

The IRS will continue sending more letters if you don’t remit your taxes. CP 501 or Notice of Federal Tax Lien.  You have a 10-day window to pay your taxes or the IRS will issue a tax lien.  A tax lien attaches to everything you own and will also be on your credit report and negatively affect your credit worthiness.  If you try to sell your property, the IRS tax lien will have to be paid before you receive any money.

Then the next one might be a CP 503.  This one is an urgent reminder to pay your taxes.

Depending on your past behavior with your taxes the IRS may or may not send both of these letters. 
Approximately 30-45 days after you receive these letters, the IRS will send out another letter CP 504.  This letter is an urgent letter telling you they intend to levy certain assets.

If you ignore these letters they will send a 1058, LT11, CP 90, or CP 297 letter.  This is a final notice letter that tells you the IRS intends to levy you. They may freeze your bank account, garnish your wages, or seize your property.  You generally have a small window of time at this point to comply.

If you haven’t done so by now contact a tax professional immediately!

The last letter you will receive is letter 3172.  This letter notifies you that the levy has been filed but you will probably already have had your wages garnished, bank account frozen, etc.

There is still help for you even after the IRS levies you, don’t despair you are not a bad person or criminal just because you didn’t pay your taxes.  There are millions of people in this country who have the same problem as you.

Just send an email to david@yourtaxcare.com or call (865) 363-3019 and let us fix your problem TODAY.