Decoding IRS Letters: A Guide for Home Business Owners

Welcome to Home Biz Tax Talk! I'm LeAndre Everett, the Home Biz Tax Lady. On our show airing Monday through Friday at around 9 o'clock, we delve into topics crucial for the home business community. Today, let's unravel the mystery behind common IRS letters.

Decoding IRS Letters




The Importance of Opening IRS Letters


When that IRS letter arrives, resist the urge to keep it closed. Open it, read it, and if it seems complex, seek professional assistance. Each IRS notice carries a specific number, usually found in the top right corner.

Understanding Common IRS Letters




1. CP2000: Automated Under Reporter Notice

   - Triggered when the IRS detects unreported income from forms like 1099s.
   - Prompt action is vital to avoid assumed tax liabilities.

2. CP88: Delinquent Return Refund Hold**

   - Your refund is held until past returns are filed.
   - Remember, refunds are claimable within three years of the tax due date.

3. CP504: Final Notice - Intent to Levy

   - A serious notice indicating the IRS's intent to seize assets if the debt isn't paid.
   - Wages, property, and assets are scrutinized.

4. CP90: Intent to Seize Assets and Notice of Your Right to a Hearing

   - Issued when the IRS plans to seize assets due to non-response.
   - Assets like houses, cars, and financial accounts are evaluated.

Distinguishing Between a Lien and a Levy


Understanding the disparity between a lien and a levy is crucial. A lien is a legal claim against your property, while a levy involves the physical seizure of your assets.

1. CP297: Intent to Seize Your Assets for Business Owners

   - Equivalent to CP90 but for businesses.
   - The IRS can seize and sell business assets to cover tax debts.

2. CP508C: Intent to Deny Passport Renewal or Issuance

   - If seriously delinquent (owing $50,000 or more), the IRS can limit or deny passport renewal.
   - Stay informed, especially if you plan to travel.

3. Letter 1153: Proposed Assessment of Trust Fund Recovery Penalty

   - Targets small business owners who neglect payroll taxes.
   - Non-payment could lead to business closure.

Taking Action and Seeking Professional Help


Remember, these letters come with time limits and specific instructions. Ignoring them only compounds penalties and interest. Seek professional help if the content is unclear – these matters are time-sensitive and demand attention.

In conclusion, open and read your IRS letters promptly. Your understanding and timely action can make a significant difference in resolving tax matters. If you have questions or need guidance, feel free to reach out. Thanks for joining *Home Biz Tax Talk*; I'm LeAndre Everett. Have a fantastic day, and I'll see you next time!

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