Smart Solutions For Federal Tax Issues
David Coffin office building

IRS sending out tax debt reminders after long pause

On Behalf of | Jan 2, 2024 | Tax |

If you or your business have tax debt, you will want to watch your mailbox carefully over the next few months. The IRS is starting to send out reminder letters to taxpayers who owe back taxes.

If you receive one of these letters, you may have as little as 21 days to submit payment or request alternative arrangements. if you do not respond, you may find yourself in legal trouble.

After the confusion and policy changes of the global health emergency, the IRS was left with a severe backlog of tax debt cases. As a result, the agency mostly stopped sending out reminder letters for the past two years. It began sending reminders to some taxpayers last fall, but it is now gearing up to start sending tens of thousands of these letters to individuals, businesses, trusts and estates that have tax debts dating back before 2023.

Intent to levy

Reminder letters typically come in a series, but most sources agree that it is a bad idea to delay responding.

Typically, the process begins with a first reminder letter telling the taxpayer to submit payment or contact the IRS within 21 days. If the person or organization does not respond within that time period, the IRS sends a second notice. If the taxpayer does not respond to the second notice, they can expect a third letter, sometimes known as an “Intent to Levy” notice.

This third notice demands that the taxpayer either pay their outstanding balance or file an appeal within 90 days. At this point, the IRS can put a lien on a taxpayer’s home, garnish their wages or even take money directly out of a taxpayer’s bank account.

Be prepared

Because the IRS paused many of these cases for so long, many taxpayers may be surprised to receive these letters in the coming months. It’s important for them to start figuring out now how they are going to respond.