IRS Notices - Which Ones Can Ruin Your Day?

There are notices from the IRS, which can be classified as a informational, warnings, or an explanation notices. Then there are those notices which could change not only your bank account, but your life for years to come.

Let's take a look at a few of the more common notices, which could ruin your day.

1. Notice of Underreported Income - CP-2000 - This is a notice lets you know that the IRS is changing your income tax return, because of underreported income, which they have linked to your social security number. Depending on how much underreported income is involved would determine the serious of this paper audit.

This is NOT a form you want to ignore, especially if the IRS is incorrect in their calculations, or you reported the income in another area of the return, or if you did not include the legal deductions, which would decrease or eliminate the proposed tax liability.

This notice is usually over 5 or 6 pages and can be intimidating. Contact a tax professional to help you sort out exactly what the IRS is asking. It is NOT in your best interest, to sign and return the form, without understanding the notice fully.

2. Notice CP-90/CP-297 - Notice of Intent to Levy - This notice is letting you know that the IRS plans to levy your assets. You will have 30 days or less to either file past due tax returns, and/or, request an Installment Agreement, or speak with a Tax Attorney to get the issue resolved. Of all of the IRS notices, the CP-90 is one of most serious.

3. CP 504 -This notice is warning you that the IRS intends to levy. This notice is a prelude to the CP-90 and is telling you that you are dangerously close to having your assets seized.

4. LT 18 (Letter 1615) - This letter is a request for past due tax returns. And is the beginning of the nightmare you may experience if you ignore the notice. Depending on how much the IRS believes you owe, could speed up the collection process. It is reported that notices are sent out 5 to 6 weeks apart, however, we have seen aggressive collection actions, which resulted in a taxpayer receiving a CP-90 within weeks after receiving a LT 1615.

The bottom line is, if you are depressed, or your fear level is too great, and just can't seem to respond to the IRS, call your doctor. Because if you aren't depressed yet, you will be once you see the penalties and interest attached to your tax liability.

Make sure you keep documents of your medical history. This will go a long way in helping the IRS to eliminate the penalties, due to health reasons, should it become necessary.

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