Notice CP90 is received when a taxpayer owes back taxes, and did not respond to earlier IRS notices regarding payment. This is the final notice a taxpayer receives regarding payment of back taxes before the IRS initiates a levy.
What is a Levy?
A levy is the seizure of a taxpayer’s assets (whether held by the taxpayer, like a car or boat, or held by someone else, like bank accounts, retirement accounts, wages etc.) to satisfy a tax debt. A wage levy or bank levy are commonly used by the IRS to collect delinquent taxes.
The IRS can only place a levy after these two steps are taken
- The IRS assessed the taxes due and sent you a Notice and Demand for Payment
- The IRS sends you Notice CP90 at least 30 days before the levy.
How to Respond
If you pay the full tax debt (including penalties and interest) after receiving Notice CP90, the IRS will stop the levy. If you cannot pay in full, obtaining a payment plan, such as an Installment Agreement or Offer in Compromise, can stop the levy.
An Installment Agreement allows taxpayers to pay their full tax debt in monthly installments. It is available to any taxpayer that can pay back the entire tax amount owed. An Offer in Compromise is a payment plan that allows for a reduction in tax debt. However, it is available only to those that do not have the financial capacity to pay their full tax debt and the meet certain eligibility requirements.
Qualifying for an Offer in Compromise usually involves negotiations with the IRS. Therefore, it is advisable to use the services of an attorney or an enrolled agent before moving forward. If you intend to use a representative, you are required to complete and send Form 2848, Power of Attorney and Declaration of Representative to the IRS. Those with a financial hardship can also use tax debt reduction plans, such as a Partial Payment Installment Agreement, to avoid a levy.
If You Disagree with the IRS
If you do not agree with the IRS’ assessments and actions, you may request a Collection Due Process Hearing. When sending the request, use Form 12153, Request for a Collection Due Process or Equivalent Hearing. You may appeal the IRS’ intent to levy and other issues at the Collection Due Process Hearing.