“Urgent!!
We intend to levy on certain assets. Please respond NOW”
Ever get a letter that starts like this? Believe me, it’s not pretty.
That’s how it started for me. I was that guy.
To be honest, I get registered mail all the time. Usually it’s for a client. This time it was for me.
But get this…the amount due was only $189.05! I was flabbergasted! So much so that I called my business partner and fellow “Tax Guy,” Deryck.
“It’s probably a CP 504,” he said. “That’s only their first letter to get you scared, get your attention, and prompt you to pay.” I wasn’t scared about $189.05, but it definitely got my attention. I thought I had already paid that bill…!
So What Do You Do?
We have advised on this site to expect the IRS to become more aggressive in their collection activities. The IRS knows that sending registered mail with an attention getting headline will get response.
It is very important when you receive this CP 504, to respond. Dealing with the IRS on matters like this are covered in our free newsletter.
There are definite steps in the collection process. Consider these if you ever get a CP 504:
- Your case is settled: When you receive a CP 504, the IRS is saying your tax bill is already settled. Based on some previous action (tax return filed, or they filed one for you, for example), you have already admitted that you owe the IRS
- IRS can’t levy yet: Although the CP 504 is scary, the IRS cannot levy your account yet. Since the IRS considers your case closed at this point, you cannot appeal their determination.
- Fear not the “Notice of Federal Tax Lien Filing:” This notice is the next step after the CP 504. If you do not take action with the CP 504, this notice will come.
.Remember that a non-response is acceptance to the IRS. Prior to the CP 504, you received a letter with a bill for this amount.
You call to work out a payment arrangement, or if you have new information, request the case be reopened. Our free newsletter gives details on dealing with the IRS, or choosing a tax representative.
A good thing about this letter is that if you do not agree with the IRS ruling, you have a Right to Hearing. The right to hearing is a key tool to fighting the IRS.
Within a 30-day period you can request a Collection Due Process (CDP) hearing to defend your position. A CDP delays the lien filing and can also reverse the IRS ruling.
If any of this is causing your eyes to glaze over, seriously consider hiring a tax professional to help you.
Even a Tax Guy gets a tax notice. The important thing is how to respond to it. Not responding is not an option.
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