irs cp14

Episode 45:  In this episode, Timalyn discusses IRS Notices.  She’ll explain what they are, why you’re receiving your IRS notice and how to read it.  Then, she’ll provide some insights into the 3 types of IRS Notices that are currently being sent out fairly aggressively by the IRS. 

Love Letters from the IRS

Timalyn lightheartedly refers to notices and communications from the IRS as love letters.  In all reality, they can be extremely serious and require immediate attention.  Once a client hires Timalyn to help resolve tax debt issues, she also receives copies of the same letters.

What Is an IRS Notice?

This is written correspondence from the IRS to the taxpayer.  It can address a number of issues including a balance due, updates on activity on your account or if any changes to a tax return have been made. 

Not every IRS Notice involves bad news.  Nonetheless, receiving one can cause anxiety.  For example, during the pandemic some people received notices of stimulus payments or confirmation of payment of the advanced child tax credit, etc.  If you’ve filed an amended tax return or you find a refund you were due, the IRS will also send you a notice.

Some IRS notifications are issued to inform you of why you are receiving an IRS communication and what you need to do to resolve any potential issues. 

IRS CP503 Notice

The bulk of the notifications being sent to taxpayers are CP503 notices.  In Episode 29, Timalyn explained the IRS CP14 notice (demand for payment of unpaid taxes).  The CP503s are different. 

The CP503 notification is the second notice and a reminder of an unpaid tax balance due.  If you have a tax liability when you submit your tax return, you’ll receive a CP14.  Then, if the balance hasn’t been paid, the IRS will issue a CP501 (the first notice for balance due).   

IRS CP504 Notice

Timalyn explains that the IRS CP504 notification is the one you really need to be concerned with, if you receive it.  This is a final notice and balance due.  The CP504 is also notification of the IRS’ intent to levy.  In Episode 5, Timalyn answered the question, “What Is a Tax Levy?”   

Basically, the Intent to Levy is the IRS telling you they have the legal right to take money owed from your personal bank account or business bank account.  The IRS also has the legal right to contact your employer to request a garnishment (funds to be withheld) from your paycheck, which are then sent to the IRS.  The latter can happen regardless of whether you are a W-2 employee or 1099 independent contractor.  The IRS can also require the employer to make backup withholdings. 

Don’t Put Your Head in the Sand

If you have received notifications from the IRS, don’t ignore them.  In many situations, the IRS is willing to work with you.  However, if you don’t open the letters and fail to respond, you’re going to run out of options and the IRS will run out of patience.

How to Read the IRS Notice

The office address of the IRS will tell you which actual office is sending the notification.  It also signifies the level of importance of this particular IRS notice.  If the address has a local address and the name of an IRS representative, your case has been assigned to an IRS revenue officer. 

Your assigned IRS revenue officer is the only person you’ll be able to communicate with, going forward.  He/she is the only IRS contact with whom you can correspond or speak with on the phone about your tax debt situation.  These revenue officers are already overloaded with cases, you just added to his/her workload. 

At the top right of your IRS notice, there is a designation of the type of notice you’re receiving.  This could be the CP501, CP503 or the dreaded CP504 (the Intent to Levy).  Timalyn comments that there are other types of notices, but these are the more common ones being issued, at this time.  Remember, there are also notices of Accuracy-Related Penalties if you failed to report all of your income or miscalculated a deduction/credit. 

The IRS Notice also provides information regarding the deadline for you to respond.  There may still be a way to deal with this, even if the deadline has passed.  However, you need to take action, quickly. 

You can appeal an IRS decision if you’ve received an IRS CP504 (Intent to Levy) notification.  You have the option of trying to contact the IRS via telephone (good luck).  You may also want to pull your tax transcripts to identify where you might disagree with the IRS and what information they are using to support their claim. 

The IRS Notice should also include a copy of the Taxpayer Bill of Rights.  It grants you the right to tax representation.  In Episode 10, Timalyn explains how to set up a payment arrangement with the IRS.

Bowens Tax Solutions specializes in tax representation.  Consider booking a consultation to speak about your tax debt situation and potential options. 

In Episode 37, Timalyn explains the Tax Relief Journey.  It’ll explain the 3 phases of tax relief.

In closing, Timalyn urges you to make sure you read any IRS notification you may already have.  These can become extremely serious, but there are steps you can take to resolve the issues. 

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin their life either.

As we conclude Episode 45, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

  

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 32:  In this episode, Timalyn will discuss the process remove a tax lien.  She recently taught a class to a group of tax professionals.  Many of them had questions related to this topic.  Based on their responses, she thought this would be a good topic to share with actual taxpayers who follow her podcast.

If you’re dealing with this situation, you’ve probably already received the IRS Notice of Federal Tax Lien.  The IRS files this with your county clerk’s office.   

What Is a Federal Tax Lien?

Timalyn explains that it’s when the IRS “calls dibs” on your property, until your federal tax debt is paid.  Even if you’re not a homeowner, it applies to any property (real or personal), such as a car.  The lien is attached and will enable the IRS to recover its money from the proceeds, if that asset is sold.  A business may have accounts receivables. The lien also attaches to this so that the IRS gets paid from those receivables or other business property.  In fact, the IRS can even attach a lien to your retirement funds.  This is a serious situation.

In Episode 7, Timalyn explained the Collection Statute Expiration Date (“CSED”).  It’s the last day the IRS can legally collect on a tax debt.  Federal tax liens also have a similar date.  They are self-releasing within 10 years of the date they were filed, as long as the IRS doesn’t re-issue a lien for specific years.   

What if I Haven’t Received a Notice of Federal Tax Lien?

This doesn’t necessarily mean you’re in the clear.  The lien is issued after the tax is assessed and after a CP14 has been issued.  The CP14 gives a date by which the payment must be made.  If you fail to comply with that deadline, there is a silent tax lien.   

Due process has been followed for the lien to exist. It just hasn’t been sent to the county clerk’s office. That’s why it’s referred to as a silent lien. This is important to note because the IRS can issue a tax levy, as discussed in Episode 5 without filing a lien with the county clerk.

What if I Can’t Pay the Tax Debt?

As Timalyn discussed in Episode 10, you may have the option of setting an IRS installment agreement.  If you owe less than $10,000 and have been tax compliant for the past few years, it may be a guaranteed option.  Check out Timalyn’s e-book, How to Guarantee a Pay Plan with the IRS.

Assuming you’ve already received the tax lien, how do you remove it?

4 Ways to Remove a Federal Tax Lien

The first way:  Pay the Debt 

This is not sarcasm.  It’s the obvious solution, if you can do it.  Things happen and situations change.  Once the debt is paid, the tax lien will be removed within 30 days.  The amount required can include the tax debt, any penalties and any interest that has accrued. Call the Centralized Lien Office at 800-913-6050.  You’ll want to verify the total amount owed, request the years with a tax lien issued on them and importantly, to request a Payoff Letter.  This letter will be necessary if you’re going to sell an asset with a lien attached. 

Timalyn discussed selling a home with a tax lien in Episode 4.  The Payoff Letter would be needed by the title company, so you can prove how the lien will be resolved, without delaying or preventing the sale.

The second way:  A Discharge of Property

This process will usually take about 45 days.  You’ll request that the IRS remove the tax lien so the property can be gotten rid of.  You’ll have to provide specific information on the IRS Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien.  The information will include:

●      The Fair Market Value of the Property

●      Who Is Interested in Purchasing the Property

●      The Sale Price (to determine the proceeds available to pay off the tax debt)

●      And other, related details

The third way:  Subordination

This does not eliminate the lien.  However, with subordination, the IRS agrees to stand aside to allow another creditor to get its share before the IRS.  They’ll potentially do this if they feel it’s in their best interest.  Timalyn give the example of someone with an installment agreement who is struggling to meet the agreed upon payments.  If another debt could be eliminated, it would enable more money to be applied to the installment agreement payments.

The fourth way:  Requesting a Lien Withdrawal

If your tax debt is less than $25,000, you’re setup with a direct debit installment agreement, you have no defaults related to the agreement, your most recent tax returns are filed, your tax withholdings are in order (or you’re making your estimated quarterly payments) and you’ve made 3 consecutive payments on the agreement, a good faith request for lien removal can be made.

You’ll need to complete IRS Form12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien. 

Is Bankruptcy an Option for Back Taxes?

This is a misconception many people have.  You cannot put a tax return into a bankruptcy unless it meets a 3 year, 2 year, 240-day rule.  As of the recording of this episode in 2023, your 2022, 2021 or 2020 tax debt would not qualify. 

Additionally, if you have a federal tax lien, you should not put that into the bankruptcy.  The IRS has a secured interest, via the lien, and you’ll have to pay it back anyway. 

Bankruptcy may be a viable option for debts unrelated to tax lien.  If this is your situation, Timalyn suggests you work with both a bankruptcy attorney and a tax professional to make sure your bases are covered. 

Timalyn is the owner and lead accountant at Bowens Tax Solutions and they can assist with tax lien removal.  If you want to work with someone else, at least you now have good information to help you understand the process.  If you would like to work with Bowens Tax Solutions, make sure you book your tax relief consultation with Timalyn.

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin their life either. 

As we conclude Episode 32, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

 Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode.

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact. 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.

Episode 29:  In this episode, Timalyn discusses the IRS CP14 notice.  You’ll receive this form if you owe unpaid taxes to the IRS.  It’s a demand for payment.  So, what do you do now?  Timalyn will provide all the information you need to know to handle this issue.

Timalyn begins by pointing out that the IRS wants you to set up an account and ideally receive notifications electronically.  This may or may not be the best route for you.  Receiving important notices in the mail may be a better way of making sure you don’t miss out on important communications.

What is an IRS CP14 Notice?

This is an official communication from the IRS informing you of taxes you owe, the specific amount, and it serves as a demand for payment. 

CP actually stands for “Computer Paragraph.”  Understand this is a computer-generated form that no human has handled.  Also, understand that the IRS can and does make mistakes.  It may not be accurate.

The CP14 provides the following information:

●      The amount due

●      The tax year related to the unpaid taxes

●      The date the payment is required to be made

What Should You Do if You Receive a CP14 Notice?

Timalyn explains that your first step is to remember to breathe.  Next, carefully review the information provided.  Compare that information to the copies of your IRS returns.  Do they match? 

If You Think the CP14 is incorrect, Review the 3 Phases of Tax Relief

In Episode 9, Timalyn explained these phases.  First, review your IRS transcript online.  It will tell you when your return was filed, any balance due on the account, and any payments already made.  Sometimes, payments can cross in the mail and this is why you may have received a CP14, even though you paid your taxes.

Timalyn wrote a blog post titled:  “How to Get Your IRS Transcript in 3 Steps.”  This is a good resource if you don’t know how to review your tax transcript. 

What if You Do Owe Unpaid Taxes?

Timalyn released a podcast episode (Episode 22) outlining your options if you can’t pay your tax bill.  You’ll want to determine how long it will take you to pay the taxes you owe.

If the balance is less than $10,000 and you’ve tax compliant, you may be eligible for a guaranteed installment agreement allowing you 36 months to pay it off.  Timalyn has an e-book on her website, which you can purchase.  It will walk you through this process, step-by-step.

If you owe more than $10,000 but less than $50,000, you may have the option of setting up a streamlined installment agreement.  Timalyn discusses IRS installment agreements in Episode 10.

It’s also possible to get the IRS to temporarily delay any collection activities.  Your status would be classified as “Currently Not Collectible.”  This takes effort because you have to be able to prove to the IRS that you’re unable to pay, at this time.  This is usually due to financial hardship.  You and the IRS may disagree on “reasonable” living expenses.  Listen to Episode 18 for more information.

Timalyn urges you to make every effort to pay off your tax debt as soon as possible.  The IRS can and will assess significant interest and penalties based on your unpaid taxes. 

How to Avoid this Issue in the First Place (a Bonus)

While the IRS has been lenient since the pandemic, they still have continued to issue tax liens and levy bank accounts.  You can avoid getting into this situation by making estimated tax payments. 

Self-employed individuals make estimated tax payments on a quarterly basis.  Doing so can help you avoid an underpayment penalty.  W-2 employees already make estimated tax payments through their withholdings. 

Interestingly, Timalyn points out that as a business owner, you don’t have to wait until the end of the quarter to make the payments.  In fact, you can make tax payments on a monthly or even bi-weekly. 

By paying into the IRS, you can create a cushion in case life happens.  Even though you are planning to pay your quarterly payment, an unforeseen emergency can creep up and cause you to have to cover the cost of expenses you didn’t anticipate.  It happens.

If not being able to pay your taxes is a reoccurring problem, consider getting tax planning advice.  You may be able to reduce your overall tax liability during the year. 

The Taxpayer Bill of Rights provides certain rights, such as the right to representation.  Take advantage of that right. 

If you are a tax professional, Timalyn provides a LinkedIn Live Event on Tuesday at 11:00EST.  It focuses on how to negotiate with the IRS on behalf of your clients.  Follow Timalyn on LinkedIn.  You’ll need to sign-up for the events.

The next episode is #30!  Timalyn encourages you to listen to the beginning of Episode 10 to see what a milestone that actually was.  Episode 30 will be even more special. 

Please consider sharing this episode with your friends and family.  There are many people dealing with tax issues, and you may not know about it.  This information might be helpful to someone who really needs it.  After all, back taxes shouldn’t ruin your life.

 

As we conclude Episode 29, we encourage you to connect with Timalyn on social media. You’ll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.  

Remember, Timalyn Bowens is America’s Favorite EA and she’s here to fill the tax literacy gap, one taxpayer at a time.  Thanks for listening to today’s episode. 

For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback, or suggestions for an upcoming episode topic, please submit them here:  https://www.americasfavoriteea.com/contact.

 

Disclaimer:  This podcast is for informational and educational purposes only.  It provides a framework and possible solutions for solving your tax problems, but it is not legally binding.  Please consult your tax professional regarding your specific tax situation.