Q What Is A Cp504 Notice
A. The CP504 Notice lets a taxpayer know if they have an unpaid amount due on their account. If they do not pay the amount due immediately, the IRS will seize their state income tax refund and apply it to pay the amount they owe.
The IRS will still issue CP504 Notices during the relief period, but the IRS will not issue the Final Notice of Intent to Levy Letter 1058 or LT11, unless there are pressing circumstances, which is required before a levy can be issued.
The IRS will not issue Notices of Levy during the collection suspension period, unless there are pressing circumstances. This includes automated levy programs such as: The Federal Payment Levy Program the State Income Tax Levy Program and the Municipal Income Tax Levy Program.
Permanent Fund Dividend Notice
This PFD notice explains that the taxpayer’s PFD payment was reduced because of the levy action by the Department of Treasury. In the middle of the notice a 9 digit Case Number, which consists of the TIN , where the levied payment posted. The Case Number can either be an SSN or EIN. The PFD notice advises the taxpayers that part or all of their PFD was taken by the United States Treasury. The appropriate IRS address and ACS toll-free telephone number is given on the notice.
Ways To Stop An Irs Tax Levy
The IRS has a 10-year statute of limitations from the date a debt is assessed to collect it. Unless the debt is suspended, extended, or a payment plan is enacted, once the statute of limitations expires the debt can no longer be collected. If the taxpayer is within the statutory period and is unable to pay the debt, other options exist to help manage the unpaid debt and potentially remove the levy. These include the following:
If any of these options seems too complicated to execute, or the idea of dealing with the IRS and outstanding debt presents difficulty, Jackson Hewitts Tax Resolution Services provides a full suite of options to effectively manage IRS issues.
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Municipal Tax Levy Program General
Each municipality with income tax requirements can sign an agreement with the IRS to permit the municipal income tax refund to be applied to a federal tax liability. Only cities or organizations of cities that have an individual income tax and a population of 250 thousand or more are eligible to participate in MTLP.
An electronic file of qualifying federal tax debts is sent to each participating municipality or municipality agency along with a Notice of Levy , or Memorandum in lieu of Form 668-A, through Secure Data Transport . The tax debt is matched against the municipal income tax refunds and all or a portion is sent to IRS to satisfy the federal debt.
A new levy file will be transmitted every two weeks to participating municipalities. On each subsequent file new modules can be added and modules that no longer meet the selection criteria are removed.
The municipality taxing agency processes the IRS issued file for a period of two weeks matching the file against the municipality’s refund database.
The municipality then provides the IRS with the levy payment and data via Electronic Federal Tax Payment System .
Participating municipalities are required to mail the taxpayer a notice indicating that the local tax refund has been levied by the IRS and applied to a Federal tax liability. The notice explains the amount of the refund levied and advises the taxpayer to contact the IRS at the appropriate ACS toll-free telephone number , for information regarding the MTLP levy.
Q What Should I Do If I Receive A Cp 504 Notice
A. Pay the amount due shown on the notice. Taxpayers may pay their balance online or mail their payment to the IRS in the envelope they received. Include the bottom part of the notice to make sure the IRS correctly credits the account. Visit IRS.gov/payments for more information.
If a taxpayer can’t pay the whole amount now, they can resolve outstanding liabilities by entering into a monthly payment agreement. Visit IRS.gov/payments for more information about IRS payment options. Most taxpayers will qualify to apply for a payment plan or Installment Agreement online without needing to call or write to the IRS. Note: To protect the health and safety of employees, service may be delayed. The IRS is working to reopen its offices. Check IRS operations and services for the most up-to-date status.
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Q Are Taxpayers With Payment Arrangements Made Through Irs Contracted Private Collection Agencies Allowed To Suspend Those Payments During The Covid
A. Taxpayers can make payments on their account at any time. If a taxpayer is not able to make payments during the suspension period from April 1 to July 15, 2020 under the People First Initiative, relief is provided. The private collection agencies will:
- restrict outbound calls to only when the taxpayer requests a return call in correspondence or via voice message
- not terminate or restructure an existing payment arrangement
- suspend payment reminder or missed/late payment letters and telephone calls
- continue to send reminder notices for the taxpayer’s preauthorized direct debit payments which includes instruction on how to cancel or change payments
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Low Income Filter Estimated Income
The following IRP income documents are calculated to determine the LIF estimated income:
Office of Personnel Management: 0108
The values for positions 11 & 12 identify the Type of Federal Payment:
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01 â Social Security benefit payment
-
02 â Federal retirement income
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03 â Federal contractor/vendor/supplier/provider payment
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03 – Miscellaneous Payments. IRM 5.11.7.2.1.1.
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03âFederal employee travel advance/reimbursement payment
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04 â Federal employee salary payment
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05 – Railroad Retirement benefit payment
The value for position 13 identifies whether BFS matches a record for the taxpayer or if funds were levied:
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0 â Federal disbursement matched
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1 â Federal disbursement levied
The DLN listed above would indicate that BFS matched records with OPM on an OPM payment .
Other examples:
Similar Meaning: Tax Period Blocked From Automated Levy Program
first levy issued on module what does tax code 971 mean on irs transcript irs levy release tax period blocked from automated Levy Program period blocked tax tax period blocked from automated levy program period blocked taxing period Tax levies Tax levy Tax period blocked from automated levy program Tax tax period TAX PERIOD BLOCKED FROM AUTOMATED LEVY PROGRAM .
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The Statute Of Limitations On Collection
For those beleaguered souls for whom nothing else works, the only hope of relief from unmanageable federal tax debts may be the statute of limitations on collection. In theory, the IRS has only 10 years from the date of assessment to collect. However, this 10-year limitation is shot through with so many exceptions, waivers and overlapping extensions that in all but the simplest of cases computing the correct collection statute expiration date is quite difficult. Nevertheless, thorough planning requires an understanding of how the statute of limitations applies to each clients case, and a consideration of the statute of limitations consequences of other actions, such as filing an offer in compromise, requesting an installment agreement, seeking a collection due process hearing, or filing a petition in bankruptcy. The IRS Restructuring and Reform Act of 1998 made substantial changes related to the statute of limitations, and pursuant to one unheralded provision many voluntary statute extensions previously extracted from delinquent taxpayers will expire as of December 31, 2002, only a few months from now.
Challenging An Automated Levy Amount
Even if the LIF does not kick in, the taxpayer can still dispute the levy on the grounds that it creates a financial hardship.
As the name implies, the ALP is entirely automated. Instead of an agent looking at the numbers and pulling the strings, there is simply an IT person who pushes buttons and runs algorithms. In fact, there is not even a provision for a Collection Due Process hearing in automated levy matters.
So, to successfully challenge the automated levy amount, an attorney needs to have an intimate knowledge of how the IRS works and also be very aggressive. It is not easy to move the levy out of the FPLP realm. Once that happens, an attorney can usually either get a hearing to consider a hardship exemption or arrange for an alternate payment plan, such as an installment agreement or an offer in compromise.
Venar Ayar, Esq.
Attorney-at-Law, Master of Laws in TaxationPrincipal and founder, Ayar Law
Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation the highest degree available in tax, held by only a small number of the countrys attorneys.
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Q Will Levies And Wage Garnishments Remain In Place Or Will These Be Paused Can The Taxpayer Request A Pause If So How
A. The IRS will not automatically release levies. The IRS will consider a taxpayer’s request to release a levy on a case-by-case basis if the levy is causing an economic hardship. “Economic hardship” means the levy prevents the taxpayer from meeting basic, reasonable living expenses. The IRS may ask for additional financial information to determine if a levy is causing an economic hardship.
If the taxpayer is working with a revenue officer and wants to request a release of levy, they should contact the revenue officer. Taxpayers requiring a levy release who are not assigned to work with a revenue officer should call the telephone number on the notice of levy.
If a taxpayer is unable to get through, they should fax their request to . The fax should include their name, address and social security number. If they filed jointly please include both social security numbers. In addition, include the name, address and fax number of the taxpayer’s employer or bank that is processing the levy. Note: This fax number is only used to address emergency levy release requests. Due to current limited staffing, the IRS will not respond to other issues sent to this fax line.
Federal Payment Levy Program
The Federal Payment Levy Program is an automated levy program the IRS has implemented with the Department of the Treasury, Bureau of the Fiscal Service since 2000.
BFS administers the Treasury Offset Program to collect delinquent non-tax debts for federal agencies. The FPLP was developed to interface with BFS TOP as a systemic and efficient means for the IRS to collect delinquent taxes.
IRS provides a weekly file of delinquent taxpayers to BFS. BFS matches the delinquent taxpayer file against federal payment files.
5.11.7.2.1
Levy Authority and Background
IRC§ 6331, Continuing levy on certain payments, as prescribed by the Taxpayer Relief Act of 1997 Section 1024, authorizes the IRS to issue continuous levies on payments referred to as “specified payments.”
The FPLP was developed as the automated means intended to administer this law therefore, no paper levy documents should be served to effectuate a levy under this statute. The federal agencies participating in this automated levy program process understand how this levy statute is administered and that the service of a paper levy document is the means of levy intended under IRC§ 6331 and/or .
Although Specified payments may include unemployment benefits, workmen’s compensation, certain public assistance payments, and the minimum exemption wages, salary and other income, the IRS will not pursue these payments at this time.
5.11.7.2.1.1
IRS/BFS Interagency Agreement – Federal Payments Subject to the FPLP
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Q How Does This Initiative Affect The Private Debt Collection Program
A. During the suspension period the IRS did not forward new delinquent accounts to Private Collection Agencies . PCA interaction with taxpayers is limited to inbound telephone calls until July 15, 2020. When the taxpayer indicates their ability to pay was affected by COVID, the PCA will place a hold on the account through July 15, 2020. The PCAs will not terminate or modify existing payment arrangements during the suspension period. Taxpayers should resume their payments with the first payment due on or after July 16, 2020 to avoid defaulting.
Q Will Irs Field Collection Activities Be Modified
A. The IRS suspended new Notices of Federal Tax Lien and levies initiated by field revenue officers until July 15, 2020, unless the IRS determines there are pressing circumstances, or the taxpayer has agreed to the action. However, importantly, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted. Taxpayers should be aware that revenue officers can contact taxpayers by phone, and that the revenue officer will provide resources if asked, including a direct phone line to call to verify that they are an IRS employee.
Note that the IRS does not:
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Department Of The Treasury Bureau Of The Fiscal Service Notice
This BFS notice explains that the taxpayer’s Federal payment was reduced by BFS because of the levy action by the IRS’ FPLP. It displays what type of and how much Federal payment was expected and the IRS account information to where the portion of that Federal payment was applied. It also displays IRS office information for the taxpayer to contact the IRS. In the middle of the notice: an 18 digit Account Number, which consists of the TIN type , TIN , MFT, and the tax period where the levied payment posted. The BFS notice also displays a TIN Number. The TIN Number is displayed only in SSN format , but can be either be an SSN or EIN. At the bottom of the notice: the type of Federal debt and the agency due the Federal debt the type, date and amount of the Federal payment disbursement and the paying Federal agency and then the amount levied.
Exhibit 5.19.9-7