A lot of people tend to ignore what little “snail mail” they receive these days. One thing you should never ignore is a piece of mail from the IRS. Tossing it in the trash or shredding it isn’t going to make the problem go away. In many cases, it will only escalate, and interest and/or fees may add up.
Here we’re going to look at what’s called a CP501 notice. If you receive one of these, it’s because IRS records show that you owe them money. You should have already received a CP14 notifying you that you have a balance due.
What to do if you receive a CP501
A CP501 can be a final step before the IRS starts moving toward placing a lien or levy on your assets or garnishing your wages. If you’ve received a CP501 notice, here is what to do:
- Read the notice carefully. It should include the amount due, the tax year(s) and the due date. Make sure the notice is addressed to you and not someone else.
- If you agree that the amount listed is accurate, it’s important to pay it before the due date, either online or by mail. You can request a payment plan if you can’t pay the full amount.
- If you believe the notice is inaccurate after reviewing your tax records, follow the instructions for disputing the notice, noting the date by which you must do so.
Be sure to keep copies of any correspondence you send to the IRS and make sure you have proof of any payment you make.
Don’t assume the IRS won’t follow up
With so much turmoil in the federal government right now, people often mistakenly think no one is paying attention to any back taxes they might owe. It’s important to remember that these notices are typically generated automatically based on IRS records.
It can be risky to assume that action won’t be taken to recoup the money the IRS shows is owed to it. Further, any staffing shortages at the IRS are only going to make it harder to find someone qualified to help you if you need to speak with an IRS employee.
If you’re confused or overwhelmed by a tax issue, regardless of the circumstances, getting sound tax and legal guidance can help you protect your rights and resolve the matter before it gets worse.