Last week I wrote about “IRS Collection Letters” (CP 501,503 and 504) that become increasingly threatening as time goes on and your tax debt remains unpaid.
You can also link to my first blog, the “IRS Collection Process” which is an overview of what you are in for if you owe the IRS back taxes.
After the 501/503/504, the next letter you get is the scariest. It’s known as the “Final IRS Notice” (before they start cleaning out your bank account).
The “Final IRS Notice” comes in two (2) different numbers, Letter 11 from the “Automated Collection Services” division, or Letter 1058 from “IRS Field Collections”.
The first thing you should do after receiving one of these letters is to contact a tax professional.
Next, read page 2 of the letter which talks to your right to a “Collection Due Process” hearing. You can request this hearing by completing Form 12153 which is enclosed with the Letter 11 or 1058 and sending it back to the IRS within 30 days or the original “notice date”.
This request accomplishes four things:
- Collection activity is suspended
- Your case moves from Collections to Appeals
- You buy thirty days to work with a tax professional to get unfiled returns completed and explore options to pay the IRS
- If you disagree with the Appeals ruling, you may take your case to U.S. Tax Court
If you miss the thirty day window for the CDP hearing, check the box in item 7 of page 2 of Form 12153 requesting an “Equivalent Hearing”. You have up to one year from “notice date” to request this.
Two downsides of the “Equivalent Hearing” process versus the CDP hearing:
- With the “Equivalent Hearing”, collection actions continue
- You can’t appeal an “Equivalent Hearing” decision to U.S. Tax Court.
If your situation sounds anything like this, please call me so I can help.