During the COVID-19 pandemic, the Internal Revenue Service (IRS) decided to stop sending automated collection notices to taxpayers who had an outstanding tax balance due. Tax industry experts knew that the IRS would resume sending these letters. However, industry experts expected the IRS to wait until sometime in 2024 to begin sending the new notices and that the IRS would announce in advance when it would do so. Instead, it appears that the IRS has already begun sending them.
Notices Going Out for 2022
According to news reports, taxpayers have been receiving CP501, 503, and 504 notices for taxes relating to the 2022 tax year. While the specifics of these forms vary, generally speaking, the forms notify taxpayers that they have an unpaid balance with the IRS.
Since the IRS has previously said that it is increasing its enforcement actions against taxpayers with large delinquent tax debts, many tax industry watchers expected that when the IRS resumed the automated collections notices, the IRS would prioritize sending notices to those taxpayers.
Based on anecdotal evidence of notices received so far, the IRS doesn't seem to be prioritizing notices based on any specific category of taxpayers or even a threshold amount of tax due. In one media report, an accountant said one of his clients had received a notice for an unpaid balance of $11.85.
For Some Taxpayers, the CP504 “Final” Notice May Be the First They Received
Under normal circumstances, the IRS sends a taxpayer a new notice every five weeks until the agency sends a CP504 Notice, and therefore, the CP504 Notice is the taxpayer's “Final Notice.”
With the CP504 Notice, the IRS demands immediate full payment of the unpaid taxes, and if the taxpayer fails to do so, the IRS can file a lien and start levying assets on a taxpayer's property.
However, for the resumption of notices, it seems the IRS isn't starting with a first notice and going through the entire series. Instead, the agency is sending notices based on the time that has passed since payment was due. Therefore, for some taxpayers, the CP504 Notice may be the first notice they ever receive. But they are in jeopardy of immediately losing their property.
That's why if you have received any notice from the IRS or you're wondering when one might arrive, don't wait. It will be important to address it immediately.
If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.