CP90: Intent to Levy – What You Must Do

Introduction

Receiving a CP90 notice from the IRS can be an alarming experience. This notice, formally titled "Final Notice of Intent to Levy and Notice of Your Right to a Hearing," indicates that the IRS plans to seize your assets to satisfy outstanding tax liabilities. It is crucial to understand the implications of this notice and take immediate action to protect your financial well-being. As a CPA and tax professional, I will guide you through the necessary steps to address a CP90 notice effectively.

Main Content

Understanding the CP90 Notice

A CP90 notice is a final warning from the IRS that they intend to levy your assets, which could range from wage garnishment to seizing bank accounts and other property. This notice is issued after previous attempts to collect taxes have failed. The IRS is invoking its right under Section 6331 of the Internal Revenue Code, and ignoring this notice can have severe consequences.

IRS Procedures and Forms

Upon receiving a CP90 notice, you have 30 days to respond before the IRS can proceed with a levy. Here are the steps and forms involved in addressing a CP90 notice:

• Request a Collection Due Process (CDP) Hearing: File Form 12153 to request a hearing with the IRS Office of Appeals. This stops the levy process until the hearing is completed.
• Submit Financial Information: Use Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) or Form 433-F (Collection Information Statement) to provide detailed financial data, which helps in negotiating payment plans or offers in compromise.
• Offer in Compromise: If your financial situation justifies it, consider submitting Form 656 to propose a settlement amount lower than your total tax liability.

Refer to IRS Publication 594 and Publication 1660 for detailed guidance on collection procedures and your appeal rights.

Specific Examples with Dollar Amounts

Let's consider an example where John Doe owes $15,000 in back taxes. Upon receiving a CP90 notice, John files Form 12153 within 30 days, suspending the levy. He submits Form 433-A, showing monthly expenses of $4,000 against an income of $3,500. The IRS might consider an installment agreement, allowing John to pay $100 monthly, preventing asset seizure.

In another scenario, Jane Smith owes $50,000 but can only afford a $10,000 lump sum due to significant medical expenses. By submitting Form 656, Jane successfully negotiates an offer in compromise, settling her debt for less than owed.

Common Mistakes to Avoid

Failure to act promptly is the most critical mistake. Ignoring the notice can lead to immediate levies. Additionally, providing inaccurate financial information on Form 433-A or Form 433-F can result in rejected proposals. Always ensure your submissions are complete and truthful.

Frequently Asked Questions

• What should I do immediately after receiving a CP90 notice?

  File Form 12153 to request a CDP hearing, stopping the levy action temporarily.

• Can I negotiate with the IRS on my own?

  Yes, but consulting a tax professional can improve your chances of a favorable outcome.

• How does a CP90 notice differ from other IRS notices?

  Unlike earlier notices, a CP90 is a final warning before asset seizure, emphasizing its urgency.

• What happens if I miss the 30-day deadline?

  The IRS may proceed with levying your assets, though you can still request an equivalent hearing.

• Is wage garnishment the only form of levy?

  No, the IRS can also levy bank accounts, retirement funds, and other assets.

• Can I set up a payment plan to stop the levy?

  Yes, installment agreements can halt levy actions if approved by the IRS.

• How do I prove financial hardship?

  Submit detailed financial information via Form 433-A or 433-F to demonstrate inability to pay.

Conclusion

Addressing a CP90 notice promptly and effectively is crucial to avoid severe financial repercussions. By understanding IRS procedures and utilizing the appropriate forms, you can negotiate more favorable terms or halt the levy process. For personalized assistance, visit our dashboard and connect with a tax professional.

Don't wait for the IRS to levy your assets. Take action today by accessing our dashboard for guidance tailored to your situation.

Protect your financial future and resolve tax issues efficiently. Sign up on our dashboard to explore your options and receive expert support.