The Notice of Tax and Demand for Payment letter sounds serious, and in all reality, it is. This is the last letter in a series of mild toned letters the IRS sends to collect a tax debt. The wording in the Notice is usually more aggressive and explains the actions the IRS can and will take if the tax debt is not paid, or if the taxpayer doesn’t respond. This correspondence usually arrives as certified mail, which needs to be signed for in order to receive it. Many believe if they do not sign for the letter, it is as if they never received it. This is not true, because the IRS only needs to send the Notice, not ensure the taxpayer receives it.
By the time the taxpayer receives the Notice, they should be aware of their tax debt. If there is a discrepancy, or if the taxpayer believes the debt is incorrect, a Notice to a Hearing is sent along with the Demand for Payment. The taxpayer’s request for a hearing should be a legitimate claim. All requests made for the reason that the taxpayer is unable to pay the assessed debt will be denied. The IRS has other alternatives to accommodate those situations.
Once the Notice is received, and there are no grounds for an appeal, the IRS urges taxpayers to comply with the Notice and send payment for the tax debt in full. If the taxpayer is unable to fully pay the amount, the IRS advises the taxpayer to call an IRS representative and begin making arrangements for an installment plan. If no action is taken by the taxpayer, the Notice clearly states the IRS’ intent to pursue the debt 30 days from when the Notice was issued in a number of ways:
- Bank Levy
- Wage Levy
- Property Lien
- Seizure of Assets
Many people do try and handle the IRS on their own and are often confused by the process. Some may enter into arrangements they cannot fulfill. If a taxpayer decides to conduct business with the IRS personally, the IRS assumes they accurately know the tax law, and can effectively act as their own tax attorney. It is strongly suggested that at the time of receiving the Notice, the taxpayer finds professional representation to correspond with the IRS on their behalf.
Receiving a Notice of Tax and Demand for Payment is a strict announcement affirming the assessed tax debt, requiring the taxpayer to become proactive in handling the matter. It is also sent to indicate the specific actions the IRS could and would take in order to collect the tax debt. The Notice informs the taxpayer of their right to an appeal, and provides contact numbers to move forward in the collections process. If this letter is ignored, the letter that follows 30 days later is a Notice of Intent to take action against the taxpayer. In the end, it is better to contact either the IRS or a professional who can help with the matter because after this letter, the penalties are more severe, the IRS becomes harder to negotiate with, and the debt keeps accruing interest and fees.