If you have tax debt, expect to receive an IRS notice in the mail at some point. These notices let you know your tax balance due and that the IRS will enforce collections if you don’t pay.
With this in mind, let’s review the most common types of IRS tax notices:
IRS Balance Due Notices
IRS balance due letters are exactly what they sound like — a notice that you have unpaid taxes that are due. There are several types of tax balance notices you might receive from time to time, including:
You receive a CP11 notice when there’s a miscalculation on your tax return and you now owe the IRS. By all means, pay the new taxes or contact the IRS by phone or mail if you disagree. You have 60 days from the date on your CP11 letter to dispute the changes.
You receive a CP14 notice on account of owing the IRS money for unpaid taxes.
You can either pay the full tax amount you owe, set up an IRS payment plan to pay over time, submit an Offer in Compromise to settle for less than what you owe, or request Currently Not Collectible status to temporarily delay collection. Read more about the best ways to pay IRS tax debt.
However, if you disagree with your CP14 letter when you receive it, call the toll-free IRS phone number.
You receive a CP161 notice as a result of an unpaid balance due to the IRS. This balance is due to unpaid taxes, an underpayment on your tax return, or interest and/or penalties.
If the IRS calculated the wrong tax amount due, respond to your CP161 within 10 days of receiving the letter.
You receive a CP501 notice when the IRS sees you have a balance due for unpaid taxes. You can pay the balance due in full or in installments in order to stop collections. To dispute the tax debt in your CP501 letter, call the IRS telephone number printed on the notice.
If you owe the IRS and don’t pay by the due date, however, the IRS adds interest and a late payment penalty to your original tax balance.
You receive a CP503 notice after the IRS contacts you about unpaid tax debt and they’re unable to reach you. CP503 is the second balance due reminder letter sent in order to request payment.
You receive an LT16 notice when the IRS claims you either owe unpaid taxes or have failed to file tax returns in one or more years. Most important, you must respond to the LT16 letter to avoid possible IRS collections. Enforcement includes wage garnishment or a federal tax lien.
IRS Levy Notices / Tax Lien Notices
An IRS levy notice or tax lien notice informs you that the IRS plans to either place a federal tax lien on your assets to satisfy an unpaid tax debt or potentially seize your property via a levy. For example, the types of levy and tax lien letters include the following:
You receive a CP504 notice when you have unpaid tax debt and the IRS plans to levy. At this time, they’ll levy your income, bank accounts, or property if you fail to make payment arrangements.
Of course, if you disagree with your CP504 letter, contact the IRS when you receive it.
CP90 / CP297
You receive a CP90 notice or CP297 notice as the final notice of the IRS’s intent to levy. Both letters explain the next steps the IRS plans to take to levy and collect your tax debt. You have 30 days to pay or make a payment arrangement.
If you disagree with your CP90 letter or CP297 letter, request a Collection Due Process (CDP) hearing to appeal.
CP91 / CP298
You receive a CP91 notice or CP298 notice as the final notice of the IRS’s intent to levy a portion of your Social Security benefits. The IRS can levy up to 15% of your Social Security to satisfy an unpaid tax debt. With this in mind, you have 30 days to pay or set up an IRS payment plan when you receive a CP91 or CP298.
If you have questions about your CP91 letter or CP298 letter, call the IRS phone number on the notice. Do not contact the Social Security Administration (SSA).
You receive a CP523 notice from the IRS when you default on an installment agreement. This notice informs you that the IRS is terminating your installment agreement. As a result of sending a CP523 letter, the IRS starts more aggressive collection efforts, like a levy or lien.
LT11 / Letter 1058
You receive an LT11 notice or Letter 1058 when the IRS plans to seize your assets over nonpayment of an overdue tax debt. In this situation, if you don’t pay or respond to your LT11 or Letter 1058, the IRS can levy wages, other income, bank accounts, cars and homes, Social Security benefits and more.
To appeal the tax balance due in your LT11 letter or 1058 letter, request a Collection Due Process hearing.
Notice of Federal Tax Lien
You’ll receive a Notice of Federal Tax Lien as a result of the IRS filing a federal tax lien against your personal property.
Once the tax lien is in place, the federal government has a legal claim to your property. Therefore, when you go to sell it, the tax lien must be satisfied before you receive proceeds from the sale.
IRS Private Collection Notices
The IRS sends a private collection notice in order to inform you it placed your unpaid tax debt with a third-party collection agency.
You receive a CP40 notice when the IRS assigns your tax debt to a private collection agency (PCA). Your CP40 letter includes the name and contact information of the PCA with which the IRS places your tax debt. In addition, you’ll also receive a letter from your assigned PCA.
Here’s a list of the private collection agencies working with the IRS: https://www.irs.gov/businesses/small-businesses-self-employed/private-debt-collection.
IRS Refund Notices (Refund Applied to Tax Debt)
The IRS sends refund notices when it applies part or all of your tax refund to satisfy a tax debt.
You receive a CP16 notice if the IRS amended your tax return because of a filing error or if the IRS plans to use some or all of your tax refund to pay your tax debt. Contact the IRS within 60 days of your CP16 letter to be sure there’s time to appeal if you disagree.
If your refund was applied to your spouse’s tax debt, you may qualify for Injured Spouse Allocation.
You receive a CP49 notice after the IRS seizes some or all of your tax refund to cover your unpaid taxes. If the IRS only uses part of your tax refund, however, you’ll receive a check for the remainder.
When your seized tax refund doesn’t satisfy your full tax debt, there are a number of tax relief options that are available. You’ll need to set up an IRS payment plan or submit an Offer in Compromise. Call the IRS number on your CP49 letter if you disagree with the notice.
IRS Seriously Delinquent Tax Debt Notice (Revocation or Denial of Passport)
If your unpaid taxes are substantial enough (typically more than $50,000) and the IRS has had no luck collecting the tax balance due, the IRS will inform the U.S. Department of State that you have a “seriously delinquent” tax debt.
Your current passport can then be revoked or your new passport application can be denied.
You receive a CP508C notice when the IRS has referred your unpaid “seriously delinquent” tax debt to the U.S. Department of State. This department can revoke your passport or deny your passport application. Therefore, you must make arrangements to pay your tax debt in order to avoid passport denial or revocation.
Once you resolve your tax debt with the IRS, however, they will reverse the “seriously delinquent” certification. The U.S. Department of State will reverse within 30 days of notification from the IRS that you paid your taxes.
How Can Wiztax Help?
We can look at all the options that are available to you and tell you exactly what the best path forward will be. For example, an Offer in Compromise will almost always be the best option for those who are eligible.
Call us today at (866) 568-4593 to learn more about how we can help, or start here to take our free online evaluation. Regardless, we promise to save you thousands in fees.
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