Understanding IRS Collection Notices
Updated: Nov 24, 2020
When your tax return is filed the IRS and there is a balance due the IRS will process your return and send you a billing notice letting you know that there is still a balance due. If the balance isn't paid 30 days after the billing notice is mailed out, the IRS will send three more notices and a letter:
CP501 Notice - There is a balance due on the taxpayers account.
This is a friendly reminder from the IRS that you still have an unpaid tax bill. The CP501 notice includes a recap of the amount you owe plus any penalties and interest that have accrued. If the taxpayer doesn't pay the amount due or make payment arrangements, the IRS can file a Notice of Federal Tax Lien on the taxpayers’ property at any time, if they haven't already done so. In addition, if the taxpayer doesn't pay the amount owed by the due date on the notice, interest will increase, and additional penalties may apply. If the IRS does not have record of receiving a payment in full on the account within 30 days from the notice date a CP503 IRS notice will be mailed.
CP503 Notice - This is the second reminder that you have an unpaid tax debt.
The IRS has not heard from the taxpayer and the taxpayer still has an unpaid balance on one of the tax accounts. (This is usually the second notice). The entire balance should be paid within 10 days of the date of the notice or additional penalty and interest will be added. The taxpayer again has 30 days to pay the balance due in full before the CP504 is mailed out.
CP504 - This notice shows this text "Notice of Intent to Levy" above the balance due.
There is an unpaid amount due on the taxpayers account. If they do not pay the amount due immediately, the IRS will seize (levy) their state income tax refund and apply it to pay the amount owed. This is usually the final notice before the IRS acts.
LT11 – "Notice of Intent to Levy"
This notice is telling the taxpayer that the IRS intends to issue a levy against bank accounts, wages or other assets because a balance is still due on one of the tax accounts .The difference between the Letter 11 and the CP504 is that the taxpayer is notified of their right to request a Collection Due Process Hearing (CDP). A copy of Form 12153 is included along with Letter 11, and this form must be filed within 30 days from the date of LT11 for the taxpayer to secure a CDP hearing. The filing Form 12153 will halt IRS collection activity, forward their case to IRS appeals.
If you or someone you know have received any of the above notices, please feel free to contact me at either (612) 516 5878 or by email