What to do with the IRS Final Notice?
If you receive an IRS final notice of intent to levy, you need to act now! Recently, I blogged about IRS collection notices. For the most part, IRS collection notices are just reminders to pay your taxes. Not so with IRS final notices. Ignore this notice at your own peril.
The IRS is warning you that if you do not respond to this collection notice you risk your assets. Fail to respond within the 30 days provided and the IRS can seize your assets, by wage garnishment or bank levy. Additionally, You lose the right to stop IRS collections while you work out a plan to resolve your tax debts.
Before going any further, I want to point out the IRS final notice of intent to levy has changed a bit. The notice now reads: “Intent to seize your assets and notice of your right to a hearing.” You can click this link to see an example.
If you are not sure which notice you have, just look at the top left corner of the first page. Look for either CP90 or CP297. If you see either of those two numbers, you have a problem you need to address.
First, the IRS Final Notice gives the IRS authority to seize your assets
The final notice of intent to levy gives the IRS the right to seize your assets. If you look at the sample notice again you will see that the IRS provides you with 30 days to respond. After the 30 days have passed, the IRS can proceed with seizing any funds you have in a bank account or garnish your wages. You can read my blog post on dealing with IRS levies if you want more details on what to expect if you are levied.
Having your wages garnished or your bank accounts seized hurts. The IRS intends it to hurt, it makes taxpayers come to the table to resolve their back taxes. My advice is to not take it to that extreme. In the next section, I will talk about the opportunity the final notice provides you to resolve your tax debts.
Second, the IRS Final Notice gives you valuable appeals rights
While the final notice of intent to levy gives the IRS the right to seize your assets, it also provides you a window of opportunity to resolve your tax debts. Embedded in the notice is a right to appeal the IRS decision to levy your assets. If you look on page 2 of the sample notice, you will see a section titled: “Right to request a Collection Due Process hearing.”
A collection due process hearing (or CDP hearing), if requested within the 30 day grace period, stops IRS collection actions. It also provides a chance to discuss your back taxes with IRS appeals and propose a plan for dealing with your back taxes. Tax professionals love CDP hearings because it provides breathing room for the client to get his or her records in order and develop a plan to resolve their unpaid taxes. If you cannot work out a deal with IRS appeals you can further appeal to US Tax Court, which provides another opportunity to address your back taxes.
Fail to respond within 30 days mean you lose out on this valuable right. You can still request an equivalent hearing, which is similar to a CDP hearing, but you have no right to appeal to US Tax Court and the IRS can proceed with levying your assets. So you don’t want to lose the right to a CDP hearing by ignoring the final notice of intent to levy.
So there it is. Two very good reasons to open your IRS collection notices. Don’t put your head into the sand and open your mail!
My firm helps Maine taxpayers in trouble. If you or someone you know in the Portland, Maine area has received an IRS collection notice, please feel free to contact me directly at 207-299-0515 or by filling out my contact form.
James D. Wade, Esq.
Law Office of James D. Wade
53 Exchange St., Ste 400
Portland, ME 04101