The IRS has different methods of collecting a tax debt if a taxpayer refuses to cooperate in resolving the debt. The collection process always begins with collection letters from the IRS requesting payment of the debt amount. Taxpayers may owe back taxes to the IRS due to errors in tax returns, changes made to tax returns by the IRS and amended tax returns.
If no effort is made by taxpayers to resolve the tax debt, the IRS may place a lien against them or their assets to guarantee payment of the tax debt. After the lien is placed, if no effort is made to resolve the tax debt, the IRS will move to levy the assets to fulfill the tax debt.
The resolution of the tax debt does not always involve the full payment of back taxes. Taxpayers whose financial condition makes them unable to pay their back taxes in full should consider the various IRS payment programs that facilitate payment in installments, debt reduction, or the postponement of payment.
In cases of a tax lien or tax levy, taxpayers should immediately make efforts to resolve their tax debt. After the initial notices, the IRS sends a CP-90 letter, which is the final notice regarding back tax payment.
The IRS may send the following notices in cases of unpaid taxes:
CP 297A – Notice of Levy and Notice of Your Right to a Hearing
CP 90 / CP 297 – Final Notice – Notice of Intent to Levy and Notice of Your Right to a Hearing
CP 91 / CP 298 – Final Notice Before Levy on Social Security Benefits
Letter 1058 (LT 11) – Final Notice prior to levy; your right to a hearing
CP90C – We levied you for unpaid taxes. You have the right to a Collection Due Process hearing.
CP504 – You have an unpaid amount due on your account. If you do not pay the amount due immediately, the IRS will seize (levy) your state income tax refund and apply it to pay the amount you owe.
CP504B – You have an unpaid amount due on your account. If you do not pay the amount due immediately, the IRS will seize (levy) certain property or rights to property and apply it to pay the amount you owe.
It is important for taxpayers to research, understand and consult tax specialists before contacting the IRS.