You have worked hard all of your life, creating a business, serving customers, taking care of employees, and providing for your family.
Suddenly, your business ran into a few bumps in the road, and money got a little tight.
Then, it is time to make payroll, but you are short on funds to pay your employees’ withholding taxes to the IRS. You can keep the business afloat, but it is at the cost of keeping the payroll taxes to run the business. The result: You fall behind on your IRS tax obligations.
And that can be scary – your livelihood now being put up against the IRS collection division, with agents trained in figuring out how to get the money back.
Before the IRS can take your equipment, tools, bank accounts, and customer receivables, they must first give you written notice. That’s right – no overnight surprises, no sudden IRS action to close you down, no wondering if tomorrow morning your bank accounts will be at zero from an IRS levy.
Internal Revenue Code section 6330 requires the IRS to send a letter stating that they are considering taking action against your business before they can. The letter is called a Final Notice of Intent Levy, and contains notice of rights to a hearing to resolve your taxes with the IRS without harm to your business.
The IRS identifies the Final Notice of Intent to Levy letter sent to businesses with the code CP297. Look on the first page of your IRS letter, in the upper-right hand corner. If it there is the CP297 code, then you have the Final Notice of Intent to Levy.
But the good news is you have rights and protections against the IRS CP297 Final Notice of Intent to Levy.
If you have received the CP297, here are the steps to take to protect your business from the IRS and achieve peaceful resolution:
- File a dispute with the IRS and object to them taking your business assets. Within 30 days after the IRS sent you the CP297, we have the right to tell them we disagree with any attempts to come after your business, for them to stop, and to accept an agreement to keep you operating. This dispute is known as a collection due process appeal. It automatically stops the IRS from taking (or levying, as the IRS calls it) your business assets.
- Stop the IRS from levying. With the appeal filed, we have stopped the IRS from levying your equipment, tools, accounts, receivables. You are even footing with the IRS – all negotiations will now be without the threat of levy. Your livelihood is protected under the tax laws.
- Transfer your case out of the IRS collection division. Only the IRS collection division has the power to come after your business. Once our appeal is filed, the IRS is required to transfer your case out of their collection division and to their office of appeals. That means we will no longer be negotiating with IRS agents trained to collect, but rather with agents in the IRS appeals division who are trained to resolve. These agents are appropriately known as IRS Settlement Officers.
- Get some time to prepare for the hearing. On average, it takes the IRS 4-6 months to process a collection due process appeal. During that time, the IRS is on hold – remember, the IRS cannot levy while the appeal is pending, the collection division no longer is in control, and your file is being sent to an IRS Settlement Officer. This provides you with valuable time to fix your finances, start making employment tax deposits, and prepare your finances for negotiations with the IRS Settlement Officer on an agreement to repay the taxes rather than have the IRS shut you down.
- Resolve with the IRS Settlement Officer. The purpose of the hearing is to find agreement with the IRS on a better plan than them levying your business assets. That can be an offer in compromise settlement, or an installment agreement. Installment agreements do not have to pay the IRS back in full – the IRS can permit you to continue to operate even with small payment plans, as low as a few hundred dollars per month. The IRS can even agree to you continuing to operate without any payments if we can show the Settlement Officer that the business cannot financially take on an installment agreement. The IRS calls this currently not collectible.
If you are not sure if the IRS has sent the CP297 Final Notice of Intent to Levy, records can be obtained from them that will tell us the status of your account, whether the Final Notice of Intent to Levy has been issued, and our rights to dispute IRS levy action.
Also, although tax laws require the appeal to be filed within 30 days, IRS guidelines have flexibility in allowing appeals to be filed within one year after the Final Notice of Intent to Levy was sent. So if the Final Notice was sent within the past year, appeal rights remain open to stop the IRS.
As a business owner, owing money to the IRS for unpaid employment taxes does not have to be the end of your career. Tax laws are written to protect you and your livelihood. Before any action can occur, the IRS is required to provide a Final Notice of Intent to Levy, with rights to dispute and stop a levy against your business.
Your business, your customers, your employees, your family – none of them need to suffer from an unintended rough spot in the payment of your employment taxes. Through the IRS appeal process, the IRS can be stopped and an agreement reached with an IRS Settlement Officer to keep your business running without IRS interference.