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Redesigned Collection Notices Empower Taxpayers and Increase Payment Compliance

For most of the past year, the IRS had suspended collections notices and activities, due to the COVID-19 pandemic. Now that the pandemic has waned, thanks to the vaccinations and other efforts of health care professionals, the IRS is once again ramping up its collections activities. However, there’s one difference this time, as they have unveiled a new line up of collections notices that make things more transparent and easier to follow.

These newly redesigned collections notices put the power of paying the IRS back into the hands of taxpayers and tax professionals and make things much simpler to follow.

Is This a Part of the People First Initiative?

The short answer is no, the redesigned notices are not a part of the People First Initiative. This initiative took place for several months in 2020 and was designed to give taxpayers and small businesses some relief from having to pay their past due taxes to the IRS during the height of the COVID-19 pandemic. While the redesigned collection notices are meant to help clarify the process and make it easier to pay past due taxes, thus putting the taxpayer first, so to speak, the redesign was not a part of the People First Initiative.

Why Redesign the Notices?

Over time, the IRS has realized that taxpayers have a lot of questions about the collection notices that they receive. These questions cause them to reach out to the IRS, where they end up having to wait to receive clarifications or responses. As a result, the confusion leaves the unpaid debts sitting around longer, as taxpayers understandably want to know what they are paying and why before they make that payment.

Since the redesign has added some simple clarifications to the process of paying past due tax amounts, as well as pointed the taxpayers in the right direction to get immediate clarification of what’s due and why, those debts will be cleared up faster. There is less lag time due to the questions being asked.

Which Notices Have Been Redesigned?

In order to make things simpler and clearer for tax payers who owe debts to the IRS, several collection notices have been redesigned. These include:

  • CP14 – Balance Due – This is the first notice that goes out to taxpayers to let them know that they owe the IRS money. This notice includes some necessary information, including the amount due to the IRS and the tax year that the money is owed for. It also contains a deadline that the tax amount sis due by, as well as information about making the payment. Tax payers often receive this notice and feel intimidated, but thanks to the redesign, the IRS has made it so that those who owe taxes receive all of the information that they need, without feeling intimidated and scared.
  • ACS Letter LT16 – Please Call Us About Your Overdue Taxes or Tax Return – The ACS Letter LT16 can mean two different things. Either the tax payer who receives it owes money to the IRS for a previous tax year, or the IRS did not receive their most recent or another previous year’s tax return. In order to determine which of these factors the IRS is reaching out about, it’s important to read over the notice and contact the IRS or a tax preparing professional as soon as possible to get some clarity on the situation. In some cases, the IRS may require you to submit a previous year’s tax return and pay back taxes owed, informing you of both via this form.
  • CP501 – Individual Balance Due, First Notice – In line with the previous notice, the CP14, the CP501 is designed to inform you that you have a balance due to the IRS. The notice contains plenty of information, such as the tax payers name (so you know who the notice is for), the amount due, the tax year that the debt is owed for, and most importantly, a deadline to pay the amount. If this deadline is missed, then the IRS will continue adding on interest and penalties, making the debt even larger. It is very important to comply with the notice if you can, and seek out the help of a tax professional if necessary.
  • CP503 – Individual Balance Due, Second Notice – If the first two notices (the CP14 and the CP501) are ignored and the IRS does not hear from the tax payer who owes them back taxes, then the organization will send out the CP503 notice. This is the second reminder (third, after the initial CP14 informs you of the debt), and it contains the same information as the CP501, only with some sterner language. This notice informs the tax payer of how much the owe, what year the debt is for, and provides them with a deadline by which they must pay the IRS or their debt will grow larger due to interest and penalties.
  • CP504 – Final Balance Due Notice, Intent to Levy – If the previous notices haven’t worked and the tax payer still owed money to the IRS, despite all of the collection requests, then they will send out a CP504 notice. This notice makes it clear that the balance is due immediately, or the IRS will take action, such as levying a bank account, income, or placing a lien on the property of the person who owes them the money. Like the others, this notice includes a payment deadline, as well as information about the debt such as what year it is from and how much is owed, and how to get in touch with the IRS.
  • ACS Letter LT11 – Final Notice and Notice of Intent to Levy and Your Notice of a Right to a Hearing – Along with the CP504 notice, the LT11 is yet another reminder that the tax payer needs to do something right away in order to clear up their debt with the IRS. The IRS sends this notice out when they intend to place a levy on the tax payers bank account, income, or property in order to recoup the money that they are owed. This notice is a final warning, and the tax payer needs to take action as soon as possible.
  • ACS Letter LT17 – Please Take Action on your Balance Due Using our Online Services – Many tax payers do not realize that the IRS has online services that they can use in order to pay their tax debts and communicate with the IRS. Instead, they simply think that they just submit their returns online and that is the end of it. This is not true, as the IRS has an entire web portal where tax payers can look up their accounts and pay the balances that they have due. This letter, which is send out as a reminder of the debt owed, informs them of this method of payment.
  • ACS Letter LT19 – Pay Your Outstanding Tax Returns – This letter is a reminder to the tax payer that they owe money to the IRS. It contains plenty of information about the debt, as well as listing a number of different ways to pay, such as sending in a check or money order, paying the debt online through the IRS online services web portal, and setting up a payment plan with the IRS. Intended as a way to remind the tax payer to take action, this notice is sent out amongst the other CP500-series notices.

How Do the New Notices Help Taxpayers?

Among the features of the newly redesigned tax amount due notices, all of which are listed above, is a QR code. The IRS noticed that the U.S. Postal Service had some success when using QR codes on their official mailings, so they decided to follow suit. These QR codes, one of which is placed on each past due or taxes owed notice, takes the taxpayer to a page of the IRS website where they can learn more about the amount due, pay the debt online, or contact the IRS in order to set up a payment plan.

By making these web pages accessible by smart phone, the taxpayer no longer has to go to their computer and look up the notice that they received. The information is right there. However, it is still helpful to see a tax professional should one of these notices be received, as communicating with the IRS can still be a bit intimidating.

Contact Us Today

If you have recently received a redesigned collection notice from the IRS and have questions about what the notice is for, how to pay it, or any similar issues, then reach out to the tax advisors at Enterprise Consultants Group. We can answer your questions, discuss your rights, and provide actionable options. Please contact us online or at (800) 575-9284 today to schedule a free and confidential consultation to see how we can help you.

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