The IRS is obviously a huge bureaucracy and, as anticipated, the proverbial wheels can turn slowly. In the daily case of unpaid payroll tax or personal tax liability without full fraud, it is possible to fly under collecting radar for years without incurring IRS tax problems. And even after you receive one or two gathering letters, it is a fairly safe bet that aggressive collecting behavior is still somewhere in the future. However, upon receiving the third and typically final IRS letter on unresolved IRS tax matters, the agent's patience will be gone and they will be collected. CP 504 is a game changer.
Specifically, CP 504 is the final notice to the taxpayer seeking to pay past historical balance or settlement of tax issues before the IRS initiates collection activities. This collection action is detailed in the letter. Generally, taxpayers are about to be taxed for tax refunds and are not informed that they will apply to their obligations. The letter may serve as a notice that the IRS is trying to find an asset that can be charged or that a federal tax lien may be filed. By the way, if taxpayers had previously applied for compromise as a means of solving the IRS tax problem, agencies do not have to worry about attaching assets very much. In order to apply for OIC, of course, full financial disclosure needs to be handed over to IRS.
As a practical matter, the collection letter of CP 504 will not be generated first if the delinquent taxpayer responds promptly to prior notice regarding the resolution of the IRS tax problem. Delay is a character defect, mostly being a victim, but it is a dangerous act at this point in the IRS process. They are engaged in significant and proactive collecting activities. It would be unrealistic for most people without the time, intelligence and inclination needed to become an expert on IRS policies and procedures. There is a time to seek advice from tax experts. In particular, questions about the effectiveness of debt. Most families can not exaggerate the financial and emotional impact of banking and wage taxation. The long-term impact of federal tax liens is serious and affects employment, the acquisition of credit and even the handling of business problems. Even after receipt of CP 504, there still remains a fair and affordable option related to the resolution of IRS tax matters, but the debtor must actively pursue that option. At this time, the advice of tax resolution experts who are familiar with IRS collection tactics is valuable and has sufficient value for effort and expenses.
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