IRS Law Blog

My grandmother used to have saying about people, always telling me “It’s what inside that counts.”

It was her way of telling young Howie to not to judge a book by its cover, that looks can be deceiving.

Little did I know that one day that advice would apply to IRS collection letters.

Yes, on the surface, IRS collection letters look the same, and those looks can often be very misleading.

One of the biggest offenders is the IRS Notice of Intent to Levy.

As part of its collection process, the IRS sends two different letters, each called a Notice of Intent to Levy.  On their surface, these two letters are indistinguishable to a layperson, and look the same. But they are very different in what they permit the IRS to do.

A little background on a Notice of Intent to Levy:  Before the IRS can levy you, they have to send the Notice of Intent to Levy.  This is law under Internal Revenue Code Section 6330 – the IRS must notify you in writing before levying, and tell you about your rights to file an appeal within 30 days in response.  If an appeal is filed, the IRS cannot levy until it is resolved.

In other words, in most situations, the IRS is not permitted to levy by surprise.  But the letters they send to permit you to prevent it are camouflaged.

Needless to say, it is extremely important to be able to distinguish between the real Notice of Intent to Levy and the wannabe.  Your rights to protect your property can depend on it.

An easy way to tell the difference is to find the identifier that the IRS places in the upper-right hand corner of the letters.

The wannabe Notice of Intent to Levy is identified as a CP504; the real one is identified by the IRS as an LT11 (sometimes it will be a L1058).

Only the Notice of Intent to Levy identified as an LT11 actually permits the IRS to do so; the other (CP504) is, well, a dummy letter.

Let’s take a look at a sample CP504 that the IRS recently sent to my client, and put it through some truth serum.

Here is what the CP504 (aka the pretend Notice of Intent to Levy), states on its face:

“Notice of Intent to Levy”

“Amount Due Immediately $85,793.50”

“This is a notice of intent to seize (“levy”) your state tax refund or other property. As we notified you before, our records show you have unpaid taxes for the tax year ending December 31, 2012.  If you don’t call us immediately or pay the amount due, we may seize ((“levy”) your property or rights to property (including any state tax refunds) and apply it to the $85,793.50 you owe.”

The CP504 goes on to state the property to be levied includes wages, commissions, bank accounts, and personal assets (including your car and home.

Sounds like the IRS is about to get you, right?  Take your stuff, wipe you out.  Not so fast.

All IRS appearances aside, this is not the letter under Internal Revenue Code 6330 that permits the IRS to take levy action.

Here’s why:

The CP504 Notice of Intent to Levy does not notify you of appeal rights.

Remember, the Internal Revenue Code requires the IRS to clearly state rights to appeal a notice of intent to levy.  Without such notification, the IRS cannot levy. There are no such notifications in the CP504.

The CP504 is not what it appears to be.  Standing alone, it does not permit the IRS to levy you.

Will the real Notice of Intent to Levy please stand up?

The LT11 Notice of Intent to Levy follows the law and notifies you of the right to file an appeal action to stop the levy.

Only the LT11 provides notification of the rights to file a Collection Due Process action.  It even includes enclosures and forms to file the Collection Due Process Appeal.  No such forms are included with the CP504 because, well, it is not what it appears to be.  It provides no appeal rights, and as a result, does not standing alone permit the IRS to levy.

Only the LT11 permits the IRS to levy your wages, commissions, bank accounts, car, and home.

In most cases, expect the IRS to send the CP504 immediately before the LT11.  To be sure the IRS has not sent the LT11/L1058 out of order, I recommend that the IRS be contacted to confirm.  An IRS account transcript will state if a real Final Notice has been sent, and when.

Even if the IRS cannot levy after sending the CP504, one thing is for sure:  Your case is active in the IRS collection system.  That means the IRS is coming.

If you have been sent the CP504, the good news is that we can confirm that we are on protected ground and the IRS cannot levy, giving us precious time to prepare before the LT11 letter is sent.  An once we receive the LT11, an appeal would be filed with the IRS, stopping the levy while we negotiate alternatives, like an offer in compromise, installment agreement, or currently uncollectible status.