Relief from your IRS tax debt is on the way, but for an unknown period.
If you owe the IRS, then you’ll want to shout this IRS tax debt relief from the rooftops.
In a time when the IRS has ramped up resources in every which way but loose to hone in on owners of virtual currency, they have temporarily loosened up on those taxpayers who need some IRS tax debt relief.
If you are a taxpayer who currently has an outstanding balance with the IRS, you can take a deep breath.
Why do US taxpayers currently have some IRS tax debt relief?
On August 21, 2020, the IRS announced that they temporarily halted the mailing of three notifications typically sent out to taxpayers with balances due to reduce the backlog of unopened mail that mounted while most IRS operations were closed due to COVID-19.
How can I expect to receive this temporary IRS tax debt relief?
The announcement read like this:
“The IRS has temporarily suspended the mailing of three notices to taxpayers who have a balance due on their taxes. The suspended notices are (1) CP501; (2) CP503; and (3) CP504. However, the IRS has informed taxpayers and tax professionals that some of them might still receive these notices during the next few weeks due to the delivery of existing mailings. The IRS is working to stop these mailings at their processing centers.”
What are these three IRS tax debt notices all about?
They are a series of letters sent to taxpayers who have debt with the IRS.
These letters are sent in sequential order with escalating threats for those who have failed to pay back what they owe to the IRS.
The first letter sent is called a CP501 Notice. The taxpayer is informed that they have a balance due (money owed to the IRS) on one of their tax accounts.
If there is no action taken, a second letter is sent called a CP503 Notice. The taxpayer is informed that the IRS has not heard from them with a reminder that they still have an unpaid balance on their tax accounts.
The third and most threatening notice is called the CP504 Notice. The taxpayer is once again told they have an amount due to their account. This time they are told if they do not pay the amount due immediately, the IRS will seize (levy) their state income tax refund and apply it to pay the amount still owed to the IRS.
Which tax debt relief letter am I happiest not to receive?
This third, most threatening letter is of particular interest. CP504 is the biggie. It is the threat of a levy in 30 days.
If you fall into this category and have been worried about having to take immediate action on your tax debt, you can breathe a temporary sigh of relief.
While there has been no timeframe set for these three letters’ temporary suspension, I think this is an effort by the Dept of Treasury to stop the escalation of debt issues, especially since this is an election year.
Nonetheless, it is excellent news for the millions of taxpayers who have 2019 debt that they can’t pay because of the lousy economy.
What can I do if I have a question about IRS tax debt?
If you have a tax question, you can schedule a call on our Donnelly Tax Law website.
If you are a crypto owner worried about getting a crypto tax audit, we have put together three exciting monthly memberships to put your mind at ease so you can sleep again.
