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8 common IRS notice letters concerning tax debt collection

On Behalf of | Nov 17, 2023 | Tax Law

Seeing a letter from the IRS is frightening. Many people set them aside without fully reading or understanding them, sometimes out of anxiety that isn’t easily managed.

However, ignoring a notice from the IRS can be a major mistake. People familiar with the most common notices sent by the IRS can better respond to an unexpected letter about tax issues.

CP14 – Balance Due Notice

If the IRS notices a tax underpayment, the taxpayer will likely receive a CP14 notice advising them of the amount due. The IRS will inform them of what year they incurred the tax obligation and provide them with payment options.

CP501 – Reminder Notice

The CP501 is a courtesy reminder sent to someone with an outstanding tax balance. Typically, those receiving a CP501 will have already received other written communication from the IRS about a past-due balance. The notice will include the current balance due and provide payment instructions.

CP503 – Second Reminder Notice

Those who do not formally respond to a reminder notice will receive a CP503 as a second reminder, and this letter will include details about penalties and interest costs.

CP504 – Final Notice, Intent to Levy

If someone refuses to communicate with the IRS or fails to make a good-faith effort to pay their tax debt, the IRS may send them a CP504 notice. This form is a warning that the IRS will seek to levy someone’s assets or intercept a portion of their wages as a means of resolving their tax debt.

LT11 – Final Notice, Notice of Intent to Levy, and Your Right to a Hearing

A tax levy takes time to obtain and can put people in a difficult financial situation. Therefore, the IRS will send additional warnings notifying a taxpayer of their rights. Most parties facing a possible IRS levy can request a Collection Due Process (CDP) hearing.

CP22E – Changes to Your Form 1040, Amount Due

Sometimes, the tax return that someone files is inaccurate or incomplete. The IRS may then change the return when it receives certain information. Those who receive a CP22E owe taxes to the IRS following a change to their tax return.

CP2000 – Notice about reporting discrepancies

Various third parties, including financial institutions and employers, must provide financial information to the IRS. The IRS will send an individual taxpayer the CP2000 notice as a warning that details from an income tax return do not align with information provided by these third parties.  The recipient will need to send a response, usually clarifying their situation or accepting proposed adjustments to an income tax return.

Notice of Federal Tax Lien

Unlike the other documents on this list, the Notice of a Federal Tax Lien is not a personal letter sent to a taxpayer. It is a public document filed to notify creditors and other third parties about the IRS lien that could affect someone’s assets.

Ultimately, understanding and properly responding to tax notices – and seeking legal guidance whenever necessary – can help people resolve new and ongoing tax controversies alike.