An envelope from the IRS can ruin your afternoon. But every IRS notice letter carries a code printed in a corner of the page, and that code tells you where you stand. Once you know it, you can respond with a plan.
Start With the Code on the Page
Texas has no state income tax, so the tax letters most Texans worry about come from the IRS. Read the code on any IRS notice letter before you call anyone. It tells you whether the IRS is asking a question, sending a bill or warning about collection. Circle the reply date first.
CP14: The First Bill
A CP14 shows the unpaid tax you owe and the due date. If the figure is right, paying in full by that date avoids further interest. If you can’t pay it all, ask for a payment plan. If it’s wrong, call the number on the notice with your records ready.
Is a CP2000 a Bill?
No. A CP2000 means income reported by employers, banks or others didn’t match your return. The IRS explains that this notice isn’t a bill, though a response may be required by the date listed. You can accept the changes or send a signed response with documents showing why they’re wrong.
CP501, CP503 and CP504: The Warnings Get Sharper
CP501 and CP503 are reminders that a balance is still unpaid. A CP504 is a notice of intent to levy, warning that the IRS may take property, including money in bank accounts, and may file a federal tax lien.
LT11 or Letter 1058: Watch the 30 Days
This is the formal levy notice, and it comes with appeal rights. According to the IRS, you have 30 days from receiving an LT11 or Letter 1058 to request a Collection Due Process hearing. That hearing is an early chance at IRS debt relief, since you can raise alternatives such as a payment plan before a levy.
Where Bankruptcy Fits for Tax Debt
Filing for bankruptcy generally stops most IRS collection, including levies, while your case is open. Some older income tax can be discharged. The Taxpayer Advocate Service explains that taxes are generally excepted from discharge if the return was due within three years of filing, the tax was assessed within 240 days, or the return was filed late within two years. Whether bankruptcy helps with your taxes depends on those dates, so it’s worth checking them against your IRS records before you decide.
The IRS also offers payment plans and hardship options. If those aren’t an option, bankruptcy may be a better approach. This overview of tax debt relief explains more, and it helps you make informed choices when money problems reach a critical point.
Got an IRS Letter? Bring It In
Bring your IRS notice letter to our office, and we’ll explain what it means and which options fit. As a tax debt relief attorney in Texas, we can tell you whether tax debt bankruptcy could discharge any of what you owe and how it would affect your other debts. Contact us for legal advice before the date on your notice passes.
