In this week's episode, Travis discusses understanding your IRS Letter CP90 and CP91.
In this week's episode, Travis discusses understanding your IRS Letter CP90 and CP91.
Today I’m giving you some tips on IRS Letter CP 90 and CP 91. These are final notices of the IRS' intent to seize property or otherwise levy. There are two distinct types of these letters, and the reason I'm bringing you this information now is that this week has been an exceptionally full week of receiving these CP 90 and CP 91 letters for clients. We have an IRS Monitoring Service here at Travis Watkins Tax, and when we came in a couple of days ago, that software reported that we had around 300 notices that the IRS had filed, just in the past week alone! The IRS hit everybody right after the 4th of July and those notices have just kept coming in. We’ve been contacting clients, letting them know what’s been happening with these notices, and a lot of them hadn't even received the paper notices yet in the mail from the IRS. Our system had detected those early, but let's just quickly break down what these types of notices are and what you can do about them; what you need to do about them.
First off, the IRS Letter CP 90 is a written notification that's required by the tax code for the IRS to send to a taxpayer that they're going to place a levy or seize property. They're going to involuntarily dip into your bank account, your wages, they could seize property, including the homestead and are not bound by any state laws in that regard! What they're also telling you is that the IRS hasn’t received the full payment due, despite sending you several notices about your unpaid federal taxes. The IRS may seize your bank account or levy your property. However, you can appeal the proposed seizure or levy of your assets by requesting a collection due process hearing. The letter also lists the Internal Revenue Code section for these collection due process hearings as well. This is letting you know that you owe the IRS some money. They have reached out to you several times by correspondence via the mail, or they've sent an IRS revenue officer out in the past to try to collect the past due tax.
The Letter CP 90 also tells you that you have a right to this hearing, but the collection due process hearing is your only right to a hearing and you better take advantage of it. You have 30 days in which to do so. And it's kind of a one and done kind of thing; you lose the right to have a collection due process hearing if you have waited past the 30 statutory days. You will lose that right forever as it relates to stopping any collection activity from the IRS while the time runs before you have a hearing, and sometimes this can take months right now, as the IRS is backlogged on collection due process hearings. We're looking at three and four months, sometimes more before the IRS would have a hearing on a couple of issues. First of all, do you owe the tax? Second of all, if you owe the tax that's undisputed, then they will look at what collection alternatives do you have to filing further levies or seizures.
The collection due process hearing is a very valuable hearing because it stops collection from happening while that hearing request is pending. You make the hearing request on an IRS form 12153, that's a request for collection due process or equivalent hearing. But what this 12153 request, anyways? It is an appeal to the IRS Appeals Department to let them know that you are contesting either the underlying debt or you are seeking some type of collection alternative. It has a section in 12153 where they ask you to to let them know, for what the reasons do you need a collection alternative? Do you want an installment agreement? Do you want an Offer in Compromise or just straight up I cannot pay the balance? If relates to a lien, that's another thing that the IRS can do with Letter CP 90. If you have received one of those letters in the last few days, or ever, then they're letting you know that they're going to put a lien on your property. You can contest that or ask for a collection alternative through Letter 12153 as well. They want to know do you want a subordination, a discharge or withdrawal? I would suggest, and what we do here at my office, is we check all the boxes that form; all the above. Keep in mind that this is an appeal hearing. This is your one shot, and your best bet is to definitely come up with all the reasons and all the possibilities that you can think of to try to keep the IRS out of your bank account, your wages, et cetera.
In a nutshell, that's Letter CP 90 and 12153, the request for collection due process. It also asks about an equivalency hearing and that’s the exact same type of a hearing as the collection due process hearing, it just goes by a different name. The substance is the exact same. The only difference is that if you ask for a collection due process hearing after those 30 days that they've allowed you in the CP 90 and CP 91 letters, then they will consider it an equivalency hearing. What does that mean? Why does it matter? Who cares? They're the same hearing? The reason is that there would be no suspension of an action, a levy, lean, etc., while the request for the hearing takes place. It's also within their discretion to stop collection during that period of five, six plus months. You can probably imagine how they exercise their discretion of whether or not to stop collection. I will tell you most of the time they will not stop collection while waiting for this equivalency hearing. Don’t miss that 30-day window to ask for a stay of stopping of collection, as of right.
Now let's move on to the Letter CP 91 notice. What CP 91 is, is again, you owe the IRS money, or they think that you do, and they believe that they've sent you plenty of other correspondence in the past, and you've left that undone. And just know that these notices kind of all look the same. You have probably received CP 501, CP 502, CP 503 or other collection letters that look very much the same as these that don't carry this right to a hearing with them. But that's common right now because the IRS sent out a bunch of notices. And around 12 months ago, they were hot and heavy on this. And in early 2022, they just kind of trailed off on that while they've been busy with other things. That’s why they are just punching these things out now. It’s like somebody hit a button and it's just gone like wildfire as far as sending these CP 90 and 91 notices out.
Letter CP 91 has to do with social security payments. They can levy, meaning they can involuntarily take your social security up to 15%. So that's the main difference between CP 90 and 91. Letter CP 90 is just the general collection due process hearing and final notice of intent to levy. This one does the same thing but has to do with your social security. The IRS’ website says you need to read the notice carefully, pay what you owe and request a payment plan. If you can't pay the full amount you owe, well no big surprise. It does say you may want to learn how to request a payment plan. You might want to learn how to submit an Offer in Compromise, as it's a very powerful thing. You fill out a Form 2848 power of attorney and declaration of representative to allow someone else to talk on your behalf. And that's often a very good plan of action, because again, we're dealing with appeals. You make your request for something short of them taking your social security on that 12153 Letter within 30 days, or you lose the hearing right, forever. So, they are very similar notices and a lot of them going out right now, and they are not to be ignored! The language in both of these types of notices look very similar to other types of notices and they are threatening, scary letters from the IRS.
Who is the best person really to do a collection due process hearing for you on your behalf? That is a local licensed tax professional. My firm has tax attorneys, enrolled agents, CPAs and other licensed tax professionals. We can step in, file that 12153 on your behalf and keep the IRS at bay until they have that hearing, as well as to put your best foot forward at that hearing. And right now, given the state of the IRS, your best bet is to make that 12153 request to get started or, start again by doing the 433-collection statement. All of the IRS’ collection remedies run off of the 433 for individuals, and 433 B for businesses. That is the backbone of every type of relief that really matters when you receive these types of notices.
Get started talking with a tax professional about filing some type of collection alternative! An Offer in Compromise is the crown jewel of them all right now because it's no secret, we're seeing high inflation and there's murmurs of a recession, and maybe we're already in one. With all those things, use a licensed tax professional during this current financial environment. It’s to your benefit by hiring them to not only request the hearing, but also take that next step in filing this type of collection alternative for you. If you know that the IRS is coming, there is nothing that is more beneficial right now when it comes to IRS representation than taking advantage of our IRS Monitoring Program. It sweeps IRS transcripts daily to see if any notices have been received or are going out!
We want to get this word out quickly so that you're not blindsided and that you can take some action. But most importantly, don't miss that 30-day window to request collection rights and the rights to a hearing. Enjoy that extra time without collection bearing down on you without the levies, without the wage garnishments and all those types of things. Call or text Travis Watkins Tax at 1-844-958-1178 or log on to www.watkinspodcast.com to get started, TODAY!