There are many types of IRS notices and each one has its own repercussions if you fail to respond. The following are a few potential consequences of ignoring a letter from the IRS.
Your Passport is Denied
The IRS has the power to provide information to the State Department about taxpayers with seriously delinquent tax debt. The State Department can then deny your passport renewal or even revoked your current passport.
The CP508c notice is used to notify taxpayers of impending passport actions. If you receive this notice, you have a limited time to work out a deal and keep your passport.
You Lose Important Rights
The Collection Due Process (CDP) notice is sent before the IRS takes many types of collection actions. Every taxpayer has a right to dispute the collection action before it takes place (except in extreme circumstances, where you can argue your case afterward).
However, you only have 30 days to request your CDP hearing. If you ignore the CDP notice, you can lose these rights.
A Substitute for Return is Filed
If you receive a 2566 notice, it’s telling you that the IRS hasn’t received your tax return. If you don’t file it, the IRS will file a Substitute for Return (SFR) on your behalf.
The SFR is generally a bad deal for the taxpayer. The IRS takes whatever information it has about your income, such as a W-2 received from your employer, and uses it to complete your return.
However, the SFR typically won’t include all of your deductions because the IRS doesn’t have that information. Once the SFR is filed, the IRS can start trying to collect the tax from you.
Your Assets are Seized
The IRS will send many notices, including a CDP notice, before levying your bank account or other assets. Each of these notices is an opportunity to negotiate a deal that satisfies the IRS and protects your property.
If you ignore these notices, you could wake up one day to find your bank account empty. The IRS must send notices by mail before taking collection actions, but they are not required to take you to court and get a judgment, as many other creditors must do.
Read every IRS notice you receive, and be aware that you may have a limited time to respond. Contact a tax attorney for assistance with your tax debt problems.
Get help with IRS tax debt problems by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.