What Do IRS Collections Notices Mean?
Updated: Jun 30
By: Brian Barto, EA
After an invoice from the IRS is not paid, a series of notices (collection notices) are issued to the taxpayer. The common thread of letters is CP14, CP501, CP503, CP504, LTR11. The initials “CP” stand for Computer Paragraph. These letters are usually mailed about 5 weeks apart.
What do these IRS notices mean?
CP14: Request for payment.
CP501: You have a balance due (money you owe the IRS) on one of your tax accounts.
CP503: We have not heard from you, and you still have an unpaid balance on one of your tax accounts.
CP504: Intent to Levy. You have an unpaid amount due on your account. If you do not pay the amount due immediately, the IRS will seize your assets in an attempt to pay the balance due.
The CP504 notice is sent via Certified USPS mail and states “Notice of Intent to Seize (levy) your property or rights to property. Amount due immediately: $X,XXX.XX.” The CP504 gives the taxpayer ten days to pay, but in reality, nothing happens within the 10 day period. The CP504 is actually a thirty-day notice, with an additional fifteen days built in to allow time for the taxpayer to submit a response through the mail. The IRS cannot process the levy until after 45 days from the date on the CP504 notice. If the notice is ignored the IRS will take further action on the Levy.
If your account is NOT assigned to an IRS Field Collections Officer, but rather with Automated Collections (ACS) you may receive the “Notice of Intent to Levy,” Letter 11 (LTR11). With the "Letter 11" also comes a blank Form 12153, “Request for a Collection Due Process or Equivalent Hearing,” also referred to as “CDP.” The LTR11 has the same purpose as the CP504. It is a critical notice, because 30 days after the date of this notice, levy action may commence against the taxpayer. The way you stop the levy action is by requesting the hearing with Form 12153.
If you receive a CP504, now would be a good time to contact a Tax Resolution Professional like us. A good tax professional may be able to contact the IRS and request a collection hold while they work with you on a resolution. For your best chance of being granted a collection hold you MUST take action within thirty days of the CP504 notice or LTR11. Your tax professional may be able to secure a collection hold for as much as one hundred and twenty days. While in a Collection Hold (which can be granted by many levels of the IRS, and last for any number of days or weeks), no actions are taken against the taxpayer. You will want the help of a tax resolution professional when communicating with the IRS.
It is critical for you to understand where you are in the process because at any point your tax professional can call collections, and start working out a deal. Hopefully, you have done this prior to receiving one of these final levy notices.
At Tax Debt Resolution Services of Winchester VA, we help you eliminate your IRS issues and the stress the IRS has created in your life and help you get back to doing what you do best! We help our clients in Winchester, VA to resolve their tax debts! If you need assistance please feel free to contact me at 540-662-4432 or firstname.lastname@example.org.
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Winchester, VA 22601