FINAL NOTICE OF INTENT TO LEVY,  THE LAST AND MOST IMPORTANT OF IRS’ COLLECTION LETTER SEQUENCE. HOW TO STOP IRS FROM TAKING YOUR INCOME AND ASSETS BY LEVY.

If IRS has charged {assessed} you or your business entity any tax that is not full paid, IRS will eventually get around to mailing a series of five collection letter notices for individuals, and four collection letter notices for business entities.  If IRS mails you threatening collection letters, call tax defense lawyer David C. Dodge, toll free for a free telephone consultation at (877) 895-2950. You must understand basic IRS collection procedure to best prepare your defense. I refer to “you” as any individual taxpayer or any business entity taxpayer.   This article discusses what IRS must do before IRS can levy {involuntary seizure, or take} your income and/or assets, and what you should do about it.  Do not confuse “levy” with “lien” because they are not the same thing.  A levy is an involuntary seizure of your assets and/or income, a lien is a county recorded public notice that federal taxes are owed.  

What IRS Must Do Before It Can Levy.  Other than the three exceptions discussed below, for each period an assessed but unpaid tax liability exists, IRS cannot levy take your income and/or assets until after 30 days from the date on a FINAL NOTICE OF INTENT TO LEVY.  You can and should stop IRS from levy action if you file {meaning, by certified mail, return receipt requested} for COLLECTION DUE PROCESS RIGHTS within 30 days from the date on the Final Notice of Intent to Levy. Failure to to file for COLLECTION DUE PROCESS RIGHTS within 30 days from the date on the Final Notice of Intent to Levy allows IRS to levy your assets thereafter, with no further notice to you.   ALWAYS file for COLLECTION DUE PROCESS RIGHTS within 30 days from the Final Notice of Intent to Levy, and ALWAYS accept or retrieve all IRS certified mail.

You can ascertain where your IRS tax collection case is procedurally by the letters IRS mails you.  IRS typically mails individuals a series of five IRS collection notice letters in the following sequential order:  1st a Notice CP14, 2nd a Notice CP501, 3rd a Notice CP503, 4th a Notice CP504, then 5th the critical Final Notice of Intent to Levy most often an IRS Letter 1058.  IRS typically mails business entities a series of four IRS collection notice letters in the following sequential order:  1st a Notice CP501, 2nd a Notice CP503, 3rd a Notice CP504, then 4th the critical Final Notice of Intent to Levy most often an IRS Letter 1058.   Next I summarize the meaning of each of these sequential IRS collection letters.

First, Notice CP14, Status 21.    Receiving a Notice CP14 means federal tax liability is assessed for which IRS claims is owed, and you are in the IRS five collection notice letter sequence {four letter sequence if a business entity}.   IRS mails a Notice CP14 by regular mail.  There is no legal procedural significance to a Notice CP14.  At this point IRS may not levy take your assets or income.   “Status 21″ means IRS’ computer, called the Master File, coded the status of your collection case as Notice CP14 mailed, but the next Notice CP501 has not yet been mailed.  Click the following link to see what page one of a Notice CP14 looks like: Notice CP14

Second, Notice CP501, Status 20.    If a business entity, this is the first of four IRS sequential collection notice letters.  IRS mails a Notice CP501 by regular mail. There is no legal procedural significance to a Notice CP501. Rather, a Notice CP501 receipt means an individual has been IRS mailed the second of five sequential collection letters, and a business entity has been IRS mailed the first of four sequential collection letters.  At this point IRS may not levy take your assets or income.  “Status 20″ means IRS’ computer has coded the status of your collection case as Notice CP501 mailed, but the next Notice CP503 has not yet been mailed.  Click the following link to see what page one of a Notice CP501 looks like:  Notice CP501

Third, Notice CP503, Status 56.    If a business entity, this is the second of four IRS sequential collection notice letters.  IRS mails a Notice CP503 by regular mail. There is no legal procedural significance to a Notice CP503.  Rather, a Notice CP503 receipt means an individual has been IRS mailed the third of five sequential collection letters, and a business entity has been IRS mailed the second of four sequential collection letters.  At this point IRS may not levy take your assets or income.  “Status 56″ means IRS’ computer has coded the status of your collection case as Notice CP503 mailed, but the next Notice CP504 has not yet been mailed.  Click the following link to see what page one of a Notice CP503 looks like: Notice CP503

Fourth, Notice CP504, Status 58.   If a business entity, this is the third of four IRS sequential collection notice letters.  IRS mails a Notice CP504 by certified mail, return receipt requested.   A Notice CP504 has legal procedural significance, it allows IRS to levy take your state tax refund only.  At this point IRS may not levy take your assets or income.  “Status 58″ means IRS’ computer has coded the status of your collection case as Notice CP504 certified mailed, but the FINAL NOTICE OF INTENT TO LEVY has not yet been certified mailed.  Click the following link to see what an entire Notice CP504 looks like:  IRS Notice CP504

Fifth, FINAL NOTICE OF INTENT TO LEVY, Usually An IRS Letter 1058.  If a business entity, this is the fourth and final IRS sequential collection notice letter.  IRS mails any Final Notice of Intent to Levy by certified mail, return receipt requested. By far a Final Notice of Intent to Levy is the most CRITICAL legal procedure in a federal tax collection case.    IRS cannot levy take your assets and/or income until after 30 days from the date on the Final Notice of Intent to Levy.  TO STOP IRS FROM LEVY SEIZURE OF YOUR ASSETS/INCOME, I ADVISE YOU HAVE ME CERTIFIED MAIL FILE FOR YOUR COLLECTION DUE PROCESS RIGHTS Sometimes IRS uses a Final Notice of Intent to Levy Letter 11 rather than the more common Letter 1058, but both are the same relative to legal collection procedure.   Also, an IRS Notice CP90/297 also certified mailed, return receipt requested, is a Final Notice of Intent to Levy – Federal Payment Levy Program, which provides for Collection Due Process rights if filed for within 30 days from the Notice CP90/297 date.  The most common use of an IRS Notice CP90/297 is when the taxpayer is receiving federal benefits, like social security benefits.  Also, an IRS Notice CP92/242 also certified mailed, return receipt requested, is a Final Notice of Intent to Levy – State Tax Levy Program, which provides for Collection Due Process rights if filed for within 30 days from the Notice CP92/242 date.   Also, an IRS Notice CP77 also certified mailed, return receipt requested, is a Final Notice of Intent – Alaska Permanent Fund Dividend Levy Program, which provides for Collection Due Process rights if filed for within 30 days from the Notice CP77 date.  Whatever letter or notice form of a Final Notice of Intent to Levy, a Letter 1058, or a Letter 11, or a Notice CP90/297, or a Notice CP92/242, or an Alaska Notice 77, all are a Final Notice of Intent to Levy, and provide you only 30 days to certified mail file for Collection Due Process rights which will stop IRS from further levy seizure.  Failure file for Collection Due Process rights within 30 days from a Final Notice of Intent to Levy, allows IRS to thereafter seize your assets and income at will with no further notice to you!   Click on the following links to see what the various Final Notice of Intent to Levy letters/notices look like:

Final Notice of Intent to Levy, IRS Letter 1058

IRS Notice CP90, Federal Payment Levy Program

IRS Notice CP297, Federal Payment Levy Program

Notice CP92/242, Final Notice of Intent to Levy, State Tax Levy Program (no image)

EXCEPTIONS TO LEVY PROHIBITION BEFORE FINAL NOTICE OF INTENT TO LEVY PLUS 30 DAYS

The general rule of law is that IRS cannot levy take your income or assets until IRS first certified mailed you its Final Notice of Intent to Levy, plus 30 days after the Final Notice of Intent to Levy date in which you may stop IRS from levy by filing {I advise to file only by certified mail, return receipt requested} for your Collection Due Process rights.   There are four exceptions to this as follows:

1. Jeopardy Levy.   If IRS determines that collection of tax is in “jeopardy”, meaning the taxpayer has done some bad act to avoid collection, IRS may levy take assets/income before a Final Notice of Intent to Levy.  For example, if a taxpayer transfers valuable assets to another person or entity for no value, to avoid IRS collection, then IRS may levy before a Final Notice of Intent to Levy.  If IRS makes a jeopardy levy, IRS must still provide Collection Due Process rights within a reasonable time after levy.

2.  Disqualified Employment Tax Levy.  If any taxpayer that owes payroll/employment taxes has filed for Collection Due Process rights for prior payroll/employment taxes arising in the most recent two years, then IRS may levy assets/income for the later periods before a Final Notice of Intent to Levy.  After IRS so levies, IRS certified mails, return receipt requested, an IRS Letter 1058(e), Final Notice of Intent to Levy – Notice of Disqualified Employment Tax Levy.   If IRS makes a Disqualified Employment Tax Levy, IRS must still provide Collection Due Process Rights within a reasonable time after levy.   NOTE however that if the taxpayer, individual or business entity, has not within the most recent two years filed for Collection Due Process rights, then IRS may not levy until 30 days after a Final Notice of Intent to Levy, Letter 1058 or 11 date.

3.  State Tax Refunds.   After IRS certified mails a Notice CP504, IRS is free to levy take a taxpayer’s state tax refund, and if IRS so levies, IRS certified mails, return receipt requested, an IRS Notice CP 92/242, Final Notice of Intent to Levy – State Tax Levy Program.   If IRS makes a State Tax Levy Program levy, IRS must still provide Collection Due Process Rights within a reasonable time after levy.

4.  Federal Contractor Levy.  If IRS makes a Federal Contractor Levy, IRS must still provide Collection Due Process Rights within a reasonable time after levy.