Did you just receive IRS Notice LT1058 in the mail? Confused? Wondering what to do?
Well, you definitely shouldn’t ignore this notice. By the time the IRS sends this letter, things have become severe. The IRS sends this notice when it plans to levy your assets for unpaid taxes.
Once the IRS starts a levy, it can be hard to remove, and even if you can get the levy released, you’re likely to suffer financial consequences. To protect yourself, you should respond to this notice promptly. To help you out, here is an overview of what to expect and how to respond.
What is IRS LT 1058?
Also called LT11 or CP90, LT 1058 is a notice that the IRS sends when it plans to levy a taxpayer’s assets for unpaid taxes. Even if you’ve ignored every other notice, you should pay attention to this one.
If you have received IRS letter 1058, your first step is to carefully review the contents of the notice. It will outline the total tax debt owed, including penalties and interest. It may also specify which assets will be subject to levy, such as tax refunds, wages, bank accounts, or other property.
This notice will also provide information regarding your rights and options for resolving the debt. This may include the opportunity to request a Collection Due Process (CDP) hearing to challenge the proposed levy or to explore alternative payment arrangements such as an Installment Agreement (IA) or an Offer in Compromise (OIC).
Generally, taxpayers receiving this letter are being notified of the agency’s intent to levy their assets because they have failed to respond to several previous letters from the IRS. Failure to respond or address the underlying tax debt at this point can lead to asset seizure and further enforcement actions like wage garnishment within weeks. As such, it’s crucial to be informed and act quickly to halt or reduce the impact of collection proceedings.
The Levy Process Explained
While taxpayers who receive any notice from the IRS will, of course want to resolve the situation as quickly as possible, it can be helpful to understand and be aware of the entire IRS process and timeline when it comes to levies. Here’s a quick run-through:
Notice of Intent to Levy (IRS LT 1058)
The collections process typically begins with the IRS sending the taxpayer a Notice of Intent to Levy (LT 1058 or LT11). This notice informs the taxpayer of the IRS’ intent to levy their assets to collect unpaid taxes. Taxpayers have 30 days from the date of the notice to request a Collection Due Process (CDP) hearing, explore alternative payment options, or just pay the debt outright.
Collection Due Process (CDP) Hearing
If a taxpayer decides to contest the details of their proposed tax debt, the IRS will schedule a hearing before an impartial appeals officer. During the hearing, taxpayers can present their case, including any relevant documentation or evidence, and discuss potential alternatives to levy action.
Levy Action
If the taxpayer does not respond to the notice, or if a CDP hearing does not result in a resolution, the IRS may proceed with levy action. Levies can be imposed on various types of assets, including wages, bank accounts, Social Security benefits, and physical property.
Asset Seizure
Once levy action is initiated following the Final Notice of Intent to Levy, the IRS can seize assets to satisfy the outstanding tax debt. This may involve garnishing wages, freezing bank accounts, or seizing property. It all depends on your debt, income and whether or not you have valuable assets that could be sold to repay the debt.
Appeals and Resolutions
Taxpayers still have options to appeal levy actions even after they’ve been initiated. They can request an appeal with the Office of Appeals or explore settlement options with the IRS.
Navigating an IRS CDP Hearing
Upon receiving IRS letter 1058, taxpayers have the right to request a Collection Due Process (CDP) hearing within 30 days. This hearing offers an opportunity to challenge the proposed levy and explore alternative resolution options before the IRS proceeds with enforcement actions. Taxpayers can request a CDP hearing by using Form 12153 or by following the instructions given in their letter LT1058, CP90, or LT11. At your CDP hearing, you’ll have the chance to present your case before an impartial appeals officer, either in person, over the phone, or through written correspondence.
These hearings typically revolve around issues such as errors in the amount owed, extenuating circumstances, or eligibility for alternative resolution options like Installment Agreements or Offers in Compromise. Once your case is made, the appeals officer will review the information presented and issue an outcome. Taxpayers will receive a written copy of this decision, along with instructions on further appeal rights and next steps.
If taxpayers are dissatisfied with the outcome of the CDP hearing, they can appeal further to the Office of Appeals. The deadline for appeals is 30 days from the date of the appeals officer’s determination following a CDP hearing.
Note: If you miss the 30-day deadline to file a CDP hearing, you may still be entitled to an Equivalent Hearing (EH), which is similar to a CDP. The deadline to file an EH is within one year from the date of the Letter 1058, LT 11, or CP90.
How to Prepare for a CDP Hearing
If you decide to request a CDP hearing, it’s essential to come well-prepared. Whether you choose to work with a legal tax professional or not, your preparation for a CDP hearing should begin by thoroughly reviewing your LT1058 and any related correspondence to understand the specifics of your situation.
Next you’ll need to gather all the relevant documentation, such as tax returns, financial statements, and communication with the IRS, to support your case. Consider seeking assistance from a qualified tax professional or attorney who can provide guidance on your rights and options, as well as help prepare your case and represent you during the hearing if necessary.
By understanding your case, you can hopefully anticipate some of the potential questions or concerns that an appeals officer might bring up. Being prepared to address any such questions will help your case.
Possible Outcomes of a CDP Hearing
After your CDP hearing, the appeals officer may issue one of several outcomes. If your appeal is successful, the appeals officer may recommend adjustments to the levy amount or approve you for alternative arrangements like an IA or OIC. On the other hand, if the proposed levy is upheld, you will likely need to explore further appeal options or consider alternative methods of resolving your tax liabilities.
If no further appeals or payment options can be made, then it’s likely that the IRS will eventually issue a Final Notice of Intent to Levy your assets. Regardless of the outcome, remember to carefully review the appeals officer’s determination and follow any instructions provided to ensure compliance. If you’re not already doing so, working with a tax attorney can help you navigate your next steps.
Case Studies
In Middletown, Ohio, a man who pleaded guilty to tax fraud was recently sentenced to 30 months in prison and ordered to pay the IRS $725,000 in restitution. After failing to file his tax return for several years between 2007 and 2009, David Fraley was assessed to owe the IRS over one million dollars in tax due.
When he was issued an LT 1058 for the 2009 tax year, Fraley took measures to evade his tax liability, including no longer making deposits to his bank account, which was levied. Instead, Fraley redirected his income to his brother’s bank account, using his brother’s name and SSN. This case is a strong example of how severe the consequences can be if a tax liability is persistently ignored or evaded.
Eventually, with penalties and interest accruing, a tax liability can grow to such a huge amount that taxpayers may feel they have no choice but to attempt further evasion. However, it’s important to remember that the IRS offers payment arrangements, and the sooner a tax debt is addressed, the easier it will be to resolve. Working with an experienced tax attorney sooner rather than later can also bring the benefit of professional guidance and effective action.
Preventive Measures: Avoiding Future Notices
To avoid receiving future notices from the IRS related to levy actions, there are some preventative measures taxpayers can take:
Timely Filing and Payment: File your tax returns on time and pay any taxes owed by the due date to avoid accruing penalties and interest.
Accuracy in Reporting: Do your best to ensure accuracy when reporting income, deductions, and credits on tax returns. This will minimize the risk of errors or discrepancies, which may trigger IRS inquiries.
Communication with the IRS: Maintain open communication with the IRS regarding any changes in your financial circumstances or if you anticipate difficulties meeting your tax obligations. Respond quickly to any IRS notices and inquiries and address any issues before they escalate.
Seek Professional Assistance: Consider seeking help from tax attorneys to ensure compliance with tax laws and effectively navigate dealings with the IRS.
Resources for Help and Support
It’s vital to deal with IRS letter 1058 as soon as possible. Because this notice signals the IRS’ intent to levy your assets to collect unpaid taxes, it’s not one you want to forget about or ignore. Acting quickly can help you potentially avoid asset seizure and minimize the financial consequences of your outstanding tax liability once and for all.
If you’re dealing with a tax liability, whether you have received LT1058 or not, consider speaking to a qualified tax attorney today in order to resolve your situation with confidence. The guidance of a tax professional can help take some of the weight off your shoulders as well as ensure you take the proper steps to resolve your tax. To get help now, contact us at Wiggam Law today by filling out our online consultation form or calling us at (404) 609-1300.
FAQs
How is IRS LT 1058 different from other IRS levy notices?
LT 1058, Notice of Intent to Levy, differs from other IRS levy notices as it signifies the final step in the IRS’ collection efforts before resorting to enforced collection actions.
Can I negotiate with the IRS after receiving LT1058?
Yes, you can negotiate with the IRS after receiving LT1058. Taxpayers will have the opportunity to request a Collection Due Process (CDP) hearing within 30 days to challenge the proposed levy and explore alternative payment options.
What happens if I ignore IRS LT 1058?
Ignoring this notice can have serious consequences for taxpayers. Primarily, the IRS is likely to proceed with levy actions to seize assets such as wages, bank accounts, or property to satisfy unpaid tax debts. Ignoring IRS notices may also lead to additional penalties, interest accrual, and further enforcement actions by the IRS.
How can I protect my assets from being levied?
To protect your assets from IRS levy actions, consider addressing tax debts promptly, requesting a CDP hearing to challenge levy notices, or negotiating alternative payment arrangements with the IRS. You may also need to consider seeking legal advice from a tax attorney.
Does receiving LT 1058 mean I will definitely be levied?
No, receiving LT 1058 doesn’t mean you will definitely be levied. This notice simply serves as a formal notification of the IRS’ intent to levy assets to collect unpaid taxes but still allows taxpayers the opportunity to challenge the proposed levy, explore payment options, or pay off the debt outright.
What is the difference between LT11 and LT1058?
LT1058 is usually sent by Revenue Officers, while LT11 comes from the IRS’s Automated Collection Systems.