If you have a tax problem related to tax liability owed to the IRS, you probably have been bombarded with intimidating letters from the IRS. The IRS loves to remind you about your tax liability. Undoubtedly, every letter is scary when you owe the IRS, and not knowing what could happen next can be stressful. As part of its collection process, the IRS may send you two different letters, each with bold lettering that says “NOTICE OF INTENT TO LEVY”. The first is a “CP504” and the second is an “LT11”. On the surface, these letters may appear indistinguishable, but it is important to understand that they are actually very different in what they permit the IRS to do.
IRS Notice CP504
If you receive a CP504 letter, don’t panic. You still have time to get legal advice from a tax professional and plan your case in order to best take advantage of the law before proposing a solution to the IRS or filing bankruptcy. This notice is an attempt to get you to pay a tax liability owed to the IRS and provides notice that the IRS intends to seize your assets if you do not pay, or make arrangements to pay, your IRS liability. However, this letter does not mean you are in immediate danger and the IRS cannot actually seize your property unless a “Final Notice” has been issued. A CP504 letter is never the final notice that the IRS sends prior to seizing a taxpayer’s assets.
The CP504 letter doesn’t contain any information telling you that you have the right to appeal. If an appeal is filed, the IRS cannot levy you until it is resolved. The IRS withholds this information in the CP504 because it knows that most people with tax liability are unaware of their collection due process rights when it comes to tax liabilities. This tactic is used in hopes that you will respond out of fear and work out a deal with the IRS. If you fall for this trap, you will probably ignore the LT11 notice when you receive it, which will limit your ability to discuss your situation with IRS appeals. This is advantageous for the IRS. Since the CP504 notice requires a quick response, you will need to determine if the taxes can be fully paid or not. If not, it is important to get assistance from an experienced tax professional to ensure that the IRS does not take enforcement action against you. A tax expert can help you set up an affordable payment plan, file for a tax settlement (aka an offer-in-compromise), or request a reduction of penalties.
IRS Notice LT11
The LT11 is the next major notice that follows the CP504. This is more commonly referred to as a “Collection Due Process Notice of Intent to Levy” and is the most important notice when it comes to your rights to appeal. This is the actual Final Notice of Intent to Levy, and it tells you that your taxes remain unpaid, which permits the IRS to enforce collection of the liability.
Unlike the CP504, the LT11 will actually inform you of your appeal rights. This is one of the strongest appeals that you can file, as it protects you from the enforced collection of the liability while the appeal is pending. The Constitution affords you the due process of law, which means that the government cannot deprive you of your property, among other things, without due process. The LT11 informs you of your due process rights with regards to the IRS liability and IRS collection activities. A hearing request can be filed under certain circumstances, which will stop the levy while you negotiate collection alternatives such as an installment agreement, offer in compromise filed, or currently uncollectible status.
If you are facing a potential levy from the IRS, contact Coast One Tax Group to schedule a free consultation and get the help you need.