I received an IRS Collection Notice. Now what?

I received an IRS Collection Notice. Now what?

If you have an unpaid tax debt with the IRS, one of the first steps they take is sending a series of letters and notices demanding payment. Understanding these notices and taking prompt action is crucial to resolving your tax issues as favorably as possible. Let’s decode some of the most common IRS collection notices:

CP14 Notice – This is often the first notice you’ll receive after failing to pay taxes owed on your tax return. It states the amount due, including penalties and interest, and requests full payment within a specified timeframe.

CP501 Notice – This is known as the “reminder notice” and follows up on the CP14 when the debt remains unpaid. It’s a stronger warning that if you don’t pay soon, the IRS will pursue enforced collections actions.

CP503 Notice – With this “third party” notice, the IRS notifies the companies you have relationships with, including employers and banks, that the IRS intends to pursue measures like garnishments or levies against you if the tax debt isn’t resolved.

CP504 Notice – This is the dreaded “Intent to Levy” notice. It means the IRS plans to seize your property, income, bank accounts, or other assets within 30 days if you don’t pay or make other arrangements with them.

LT11 Notice – If you ignore all the other warnings, this “Final Notice” provides a final demand for payment and notifies you that the IRS has approved seizing your property to satisfy the outstanding debt.

There are many other potential IRS collection notices (CP90, CP92, CP63, etc.). Still, they all have the same underlying message: Pay your tax debt immediately or face enforcement actions like liens, levies, garnishments, and more. The further you are in the notice stream, the more imminent the threat of collections activity.

The best way to avoid escalating issues is to address IRS collection notices head-on as soon as you receive the first one. Explore your options like payment plans, offers in compromise, or appealing the debt itself. But don’t ignore the notices, as that’s a surefire way to have your paycheck garnished or assets seized.

If you need help resolving your tax debt, schedule a call with me today to learn about your options.