The IRS will issue a Final Notice of Intent to Levy, CP90, when you owe back taxes and have not responded to earlier IRS notices regarding payment. This is the final notice you will receive regarding payment of your back taxes before the IRS initiates a levy. If you have received a CP90 and need the services of a tax professional, contact RMS Tax Consulting at (520) 448-3531 and speak with Enrolled Agent Richard Schickel for a free consultation.
What is a Levy?
A levy is the seizure of your assets (whether held by you, such as a car or boat; or held by someone else, such as bank accounts, retirement accounts, wages, etc.) to satisfy your 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 has assessed your taxes due and sent a Notice and Demand for Payment; and
- The IRS sends you Notice CP90 at least 30 days before the levy is initiated.
How to Respond
If you pay your tax debt in full (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 Agreementallows you to pay your full tax debt in monthly installments. It is available to you if you are able to pay back the entire tax amount owed. An Offer in Compromise is a payment plan that allows for a reduction in your tax debt. However, it is available only if you do not have the financial capability to pay your full tax debt and you are able to meet certain eligibility requirements.
Qualifying for an Offer in Compromiseusually 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 Representativeto the IRS. If you have a financial hardship, you 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 your 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. If you have received an IRS collection letter, trouble is headed your way, and soon. Do not ignore this issue. If you cannot handle it yourself, call RMS Tax Consulting at (520) 448-3531 and speak with Enrolled Agent Richard Schickel for a free consultation.