IRS sent a notice stating I owe money, what does it REALLY mean?
Receiving bills in the mail are never fun, however a notice from the IRS can make anyone nervous.
Our clients at EA Tax Resolutions in Orange County California feel the exact same way when they received these IRS notices. We make our clients feel at ease by explaining exactly what each of these IRS notices mean and how we can help resolve their IRS issues.
The IRS will start sending out notices, with amounts due once a tax return is filed or the IRS files a return for you. If the amount on the return goes unpaid, the flood gate of IRS notices will begin. The following are the types of notices the IRS will be sending out, and what each of these notices REALLY mean.
CP 14 — This is the first notice in a series of notices the IRS will send, if your balance is unpaid. This IRS notice will be titled “Balance Due Notice” and it will tell you the year the balance is from, the amount (of course), and how to pay the balance.
· CP 501 — This will be the second notice you received for unpaid tax balances, sent a reminder, in case you forgot. The IRS will give you 30 days from the date on the notice to pay. Many consider this to be the first notice in the IRS collections process. If there is no response to this notice, another notice will come.
· CP503 — Titled second reminder — unpaid tax. This should look identical to the CP 501, however the amount due has increased because of interest and penalties accruing. Again, the IRS will give you 30 days to pay, if no response, the next IRS notice will be generated.
· CP504 — Titled “Notice of Intent to Levy”. Again, this will look very similar to the previous notice, however this one has some meat behind it. If the balance goes unpaid by the due date, the IRS can issue a levy against your assets, which means they can just take money from your bank account to pay the balance. It is very important to act once receiving this IRS notice, so that doesn’t happen.
· LTR 11 — This is also titled “Notice of Intent to Levy”, however one key difference is the letter will tell you your right to a Collection Due Process hearing or CDP. A blank Form 12153 is included with the letter and will need to be filed within 30 days of the date on the letter to secure a CDP hearing. Filing the Form 12153 CDP hearing will stop IRS collections, gives taxpayers time to file any missing returns, and forwards the case to IRS appeals to timely work out a proposal to resolve the balance.
If you receive any of the above notices and live in Orange County, California do not hesitate to reach out and contact our office for some help.
Anthony Fontana EA
4630 Campus Dr #203
Newport Beach, CA 92660