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Key Take Away on IRS Collection Notices

Disregarding an IRS collection notice is never a good idea. If you're unable to resolve an issue with your IRS notice, contact a tax consultant.

These tax specialists act as your voice and help taxpayers who have been unable to resolve IRS tax disputes using normal channels.

Fact Sheet: IRS Collection Notices

The IRS utilizes a large number of different collection notices to communicate with taxpayers. The most common ones include the CP14-Preliminary IRS Collection Notice, CP49-Notice of Tax Refund Seizure, CP501-First Notice from Automated Collection System, CP503-Final before Notice of Intent to Levy, CP504-Notice of Intent to Levy and CP523-Notice of Installment Agreement Default.

Overview of IRS Collection Notices

The CP14 is a non-urgent notice advising the taxpayer of a past due tax debt, and the CP49 lets you know that the IRS is taking your tax refund for payment of prior taxes owed. The CP501 is really the first urgent notice. You can expect future notices to become more threatening like the CP503, CP504 and the CP523. The CP503 Final Notice of Intent to Levy lets the taxpayer know the seriousness of the situation and immediate action is required. It gets even more serious with the CP504 Notice of Intent to Levy. Once 30 days have elapsed, the IRS will seize property, such as bank accounts and wages. And with the CP523 Notice of Installment Agreement Default, the IRS can also seize property.

The Impact of Collection Notices on Taxpayers

While collection notices from the IRS typically cause taxpayers some level of anxiety, it's the CP504-Notice of Intent to Levy and the CP523-Notice of Installment Agreement Default that cause a higher level of anxiety. That's because these notices permit the IRS to start proceedings to take cars, banks accounts, business assets, accounts receivable, real estate and wages. Other IRS collections notice may be urgent and important, but these two are the most threatening.

A Closer Look at IRS Collection Notices

The IRS may also send out a Demand for Payment Notice. This may arise if there's an outstanding balance from a prior year's return or a tax return was filed without full payment of the balance due. For example, the IRS may recalculate your income tax from a previous year and determine that you failed to report $400 of dividends from a mutual fund. You should review the notice in detail and any other IRC collection notice and respond that it's correct, partially correct or incorrect altogether while providing evident to support your position. Keep in mind that unpaid taxes will trigger the IRSs collection and enforcement process.

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