How Long Can You Ignore The IRS Before Something Bad Happens?
If you owe the IRS and do nothing, they usually send several bills before taking serious collection action. The typical sequence looks like this:
CP14 – first notice showing the balance due
CP501 – first reminder that the balance is still unpaid
CP503 – second reminder asking for payment
CP504 – notice warning the IRS may begin levy action
These letters are mostly requests for payment. At this stage the IRS is usually trying to get voluntary compliance. Interest and penalties continue to grow, but most taxpayers are not facing wage garnishment or bank levies yet.
The CP504 notice is where the tone changes. This letter warns that the IRS may levy certain assets and begin escalating collection efforts. Many people assume this means their wages or bank account will be taken immediately, but that is usually not the case. Before the IRS can levy wages or bank accounts, they must generally send a Final Notice of Intent to Levy, often issued as Letter 1058, CP90, or LT11.
That final notice is important because it starts a 30 day window where you can request a hearing and stop the levy process. The IRS buries the lede on this letter; the blurb on the notice discussing your right to a hearing isn’t apparent on the first page. However, you should take this letter seriously and use your time wisely. Addressing the problem early usually gives you far more options to resolve the tax debt. Though, if you wait until a Letter 1058, CP90, or LT11 is issued, it still isn’t too late for an experienced tax attorney to jump in and elect and attend a hearing to stop the levy process.
If you’re receiving IRS notices and are not sure what they mean or what to do next, it may be a good idea to speak with a tax professional before the situation escalates. Many IRS problems can be resolved through payment plans, settlement options, or other collection alternatives depending on your financial situation.
If you’re dealing with IRS notices or tax debt, Keeton Tax Law PLLC helps individuals and families in Las Vegas understand their options and work toward resolving IRS issues. Contact Keeton Tax Law to schedule a consultation and discuss the best path forward for your situation.
