A Letter 1058, also known as the Final Notice of Intent to Levy and Notice of Your Right to a Hearing, is a notice issued by the Internal Revenue Service (IRS) to taxpayers. This notice informs the recipient about the IRS’s intention to seize their property or rights to property, such as wages, bank accounts, and personal assets, due to unpaid tax liabilities. It is crucial to understand the implications of receiving a Letter 1058 and act promptly to address the issue and avoid severe consequences.
Upon receiving the Letter 1058 or LT11, taxpayers are granted thirty days to resolve their tax problems. Failure to do so may result in the IRS pursuing aggressive collection actions like tax liens and levies on their property. During this period, it is essential for taxpayers to explore available options to resolve their tax debt and, if necessary, seek professional help to guide them through the process.
Key Takeaways
- Letter 1058 informs taxpayers of the IRS’s intent to seize property or assets due to unpaid taxes
- Taxpayers have 30 days to address their tax issues upon receiving the notice
- Resolving tax debt promptly helps avoid aggressive IRS enforcement actions
Understanding IRS Letter 1058
IRS Letter 1058, also known as LT11, is a final notice of intent to levy from the Internal Revenue Service. This notice serves as a warning to taxpayers who have overdue taxes, informing them of the imminent seizure of their property or rights to property. The Letter 1058 is sent when previous attempts to communicate with the taxpayer have been unsuccessful, and the IRS now intends to take legal action to collect the unpaid taxes.
Upon receiving Letter 1058, a taxpayer has exactly 30 days to take appropriate action to resolve their tax issue. Ignoring or failing to address the notice within this given timeframe may result in the IRS initiating various collection methods, such as:
- Seizing wages through garnishment
- Levying bank accounts
- Confiscating personal assets, such as property or vehicles
To respond effectively to the final notice of intent to levy, taxpayers should consider doing the following:
- Review the notice: Ensure that the information on the notice is accurate, such as the tax amount due, tax years, and the taxpayer’s personal details.
- Evaluate your options: There are several ways to address the tax issue, such as entering into an installment agreement, requesting an offer in compromise, or submitting a collection due process appeal.
- Seek professional help: Given the severity of the notice, consulting with a tax professional or tax attorney can help taxpayers navigate the complexities of tax resolution and avoid potential legal consequences.
It’s important to remember that the IRS does not take the issuance of a Letter 1058 lightly. Taxpayers must treat this notice with urgency, as it represents the last opportunity to resolve their tax debt before facing the consequences of levies and seizures. By understanding the implications of this final notice, taxpayers can take appropriate action to address their tax liability and prevent the loss of their property or income.
The Collection Due Process
Rights and Procedures
The Collection Due Process (CDP) is a crucial taxpayer protection measure designed to offer an independent review of a taxpayer’s case before the Internal Revenue Service (IRS) takes any enforcement action. When a taxpayer receives an LT11 notice or Letter 1058, they are entitled to request a CDP hearing with the IRS Independent Office of Appeals. The CDP hearing allows taxpayers to discuss alternatives to enforced collection, such as payment plans or Offer in Compromise, and also dispute the amount owed if they haven’t had a prior opportunity to do so.
Upon receiving the Letter 1058, the taxpayer must take prompt action to initiate a CDP hearing. This letter serves as the final notice of the IRS’s intent to levy and seize the taxpayer’s property or rights to property, including salary, wages, bank accounts, business assets, personal assets, and social security benefits.
Initiating a CDP Hearing
To initiate a CDP hearing, the taxpayer needs to complete and submit Form 12153, Request for a Collection Due Process or Equivalent Hearing. It is essential to file this form within the 30-day period specified in the notice to preserve the right to a CDP hearing.
Here are the steps to initiate a CDP hearing:
- Obtain Form 12153 from the IRS website.
- Provide required information, such as name, address, social security number, and contact information.
- Specify the tax period and type of tax involved.
- Explain the reason for the request and any supporting documentation, if applicable.
- Sign and date the form to certify the accuracy of the information provided.
- Mail the completed form to the address indicated on the LT11 notice or Letter 1058.
If the taxpayer missed the 30-day window for requesting a CDP hearing, they may still request an Equivalent Hearing by submitting Form 12153 within one year from the date of the Final Notice of Intent to Levy. However, in this case, the taxpayer’s right to seek judicial review of the decision is not available.
The Collection Due Process offers taxpayers the opportunity to address their tax disputes with the IRS and explore alternative solutions before any enforced collection action is taken. It is crucial for taxpayers facing such a situation to be well-informed and act promptly to ensure their rights are protected.
Tax Liens and Levies
Federal Tax Liens
A federal tax lien is the government’s legal claim against a taxpayer’s property when they neglect or fail to pay a tax debt. The lien arises upon assessment of the tax liability, and a Notice of Federal Tax Lien filing informs the public, creditors in particular, that the Internal Revenue Service (IRS) has a claim against the taxpayer’s property, including property acquired after the lien filing.
Actions on Bank Accounts and Assets
When a taxpayer fails to pay their taxes, the IRS may take more forceful action, such as levying their assets. A levy is a legal seizure of a taxpayer’s property or rights to property to satisfy a tax debt. Levies generally affect bank accounts, wages, and personal assets, which can be sold to cover the outstanding liability.
Examples of levied assets include:
- Bank accounts
- Wages, commissions, and other income
- Social Security benefits
- Retirement accounts
- Rental income
- Accounts receivable
If the taxpayer does not respond within the given time frame, typically 30 days after receiving a final notice of intent to levy (Letter 1058 or LT11), the IRS proceeds with the levy actions.
Preventative Measures
To avoid tax liens and levies, taxpayers should take the following actions:
- File taxes on time: Filing taxes promptly reduces the risk of incurring interest and penalties, which can lead to a tax lien or levy.
- Pay taxes due: Whenever possible, pay the full amount to avoid any subsequent actions by the IRS.
- Set up a payment plan: If the taxpayer cannot pay the full amount, they can set up a payment plan with the IRS to pay their debt in installments.
- Request an Offer in Compromise: In certain circumstances, the taxpayer may negotiate with the IRS to settle their tax debt for less than the full amount owed. This is known as an Offer in Compromise.
Taking these preventative measures can help taxpayers avoid tax liens, levies, and the potential seizure of their assets.
Resolving Tax Debt
When faced with a tax debt that has resulted in receiving an IRS Letter 1058, it is important to understand the options available to resolve the outstanding balance due. There are two primary methods for addressing tax debt: Installment Agreements and Offers in Compromise. Both of these options have specific eligibility requirements and procedures.
Installment Agreements
An Installment Agreement is a payment plan that allows taxpayers to pay off their outstanding tax debt over time. This option may be suitable for individuals who are unable to pay their tax balance in full but can afford to make smaller monthly payments. There are several types of installment agreements, including:
- Guaranteed Installment Agreements: Available for taxpayers with a balance due of $10,000 or less, and have not had an installment agreement within the last five years.
- Streamlined Installment Agreements: Applicable for taxpayers with a balance due between $10,000 and $50,000, and can fully pay the debt within 72 months.
- Partial Pay Installment Agreements: For taxpayers who cannot pay their full debt within the time allowed by law, and the IRS determines the maximum amount they can pay monthly.
To apply for an installment agreement, taxpayers can use the Online Payment Agreement tool on the IRS website or submit Form 9465.
Offers in Compromise
An Offer in Compromise (OIC) is an agreement between the taxpayer and the IRS to settle the tax debt for less than the full amount owed. This option is only available if paying the full tax balance would create a financial hardship or if there is a genuine dispute regarding the tax amount due. The IRS will consider the taxpayer’s income, expenses, assets, and ability to pay when evaluating an OIC.
To apply for an Offer in Compromise, taxpayers must:
- Determine their eligibility using the Offer in Compromise Pre-Qualifier tool on the IRS website.
- Submit Form 656 (Offer in Compromise) and Form 433-A (Collection Information Statement) or Form 433-B (Collection Information Statement for Businesses) with the required documentation and application fee.
It is crucial to remember that resolving tax debt is a time-sensitive issue. Taking immediate steps to address and resolve the outstanding balance due will minimize potential consequences and improve the taxpayer’s financial situation.
IRS Enforcement Actions
Seizure of Property
When a taxpayer fails to pay their tax liabilities, the IRS may take enforcement actions to seize their property. This usually happens after the issuance of IRS Letter 1058, which is a final notice of intent to levy. The IRS has the authority to seize various types of property, including bank accounts, business assets, personal assets, and even social security benefits. It is essential for taxpayers to understand their rights and resolve their tax issues within the given 30-day period to avoid such enforcement actions.
In cases where property seizure is imminent, the taxpayer should consider seeking professional assistance or contacting the IRS directly to discuss payment options and possible alternatives. Options can include entering into an installment agreement, offering a compromise, or requesting a temporary delay in enforcement actions.
Garnishment of Wages
Another enforcement action the IRS may take is the garnishment of wages. This process involves seizing a portion of the taxpayer’s income directly from their employer to satisfy the outstanding tax debt. In addition to wages, the IRS can also seize state tax refunds and social security benefits as part of their levy action.
Garnishment of wages can have a significant impact on a taxpayer’s financial situation, and it’s crucial to address the underlying tax issue promptly. Like with property seizures, reaching out to the IRS and exploring resolution options can help prevent or minimize the impact of wage garnishment. Remember, the IRS would rather work with taxpayers to resolve their tax liabilities than resort to aggressive collection actions.
In conclusion, it’s essential to take IRS enforcement actions seriously and act promptly to protect one’s income, property, and financial future. By understanding the implications of IRS Letter 1058 and seeking appropriate assistance, taxpayers can minimize the damage caused by such enforcement actions and successfully resolve their tax issues.
Taxpayer Support and Resources
Consulting Tax Professionals
When dealing with a Letter 1058 or LT11, it is essential to seek professional assistance. Tax professionals, such as certified public accountants (CPAs), enrolled agents (EAs), and tax attorneys, are experts in dealing with tax issues and are authorized to represent taxpayers before the IRS.
A consultation with a tax professional can provide taxpayers with the necessary guidance on resolving their tax issue. Many tax professionals offer a free initial consultation to discuss the taxpayer’s situation and provide recommendations for the next steps. They can help review the taxpayer’s case, file missing returns, set up payment plans, or even negotiate settlements.
Low Income Taxpayer Clinics
For taxpayers with limited financial resources, Low Income Taxpayer Clinics (LITCs) are available to provide support. LITCs are independent organizations that offer low-cost or pro bono assistance to taxpayers in dealing with IRS disputes.
LITCs can help with:
- Representation in tax disputes with the IRS
- Advice about tax issues related to the IRS
- Education on taxpayer rights and responsibilities
Taxpayers can also seek assistance from the Taxpayer Advocate Service (TAS), an independent organization within the IRS dedicated to protecting taxpayers’ rights. TAS offers free, confidential help to taxpayers facing difficulties in resolving their tax issues with the IRS.
By consulting with tax professionals, utilizing LITCs, and relying on resources like the Taxpayer Advocate Service, taxpayers facing a Letter 1058 or LT11 can find support and guidance to navigate and resolve their tax issues.
Preventing and Addressing Tax Problems
Understanding Penalties and Interest
Tax problems can arise when taxpayers fail to properly manage their tax obligations, resulting in penalties and interest imposed by the IRS. To prevent these issues, it is crucial to understand the tax system and be aware of potential pitfalls. Penalties can be assessed for various reasons, such as filing a tax return late or underpaying taxes. Interest is generally charged on any unpaid tax from the due date of the return until the date of payment.
To avoid penalties and interest, make sure to:
- File on time: Submit your tax return by the deadline, even if you cannot pay the full amount due. This will help you avoid late-filing penalties.
- Pay as much as you can: If you cannot pay the full amount, pay as much as possible to reduce the amount of interest that will be charged.
- Set up a payment plan: If you are unable to pay your tax debt in full, consider setting up a payment plan with the IRS to make monthly payments.
- Consult a professional: Reach out to a tax professional or tax attorney to get advice on managing your tax obligations and avoiding penalties.
Navigating Complex Tax Issues
The tax system can be complex, and taxpayers may encounter multiple notices and difficulties in understanding tax laws. Here are some tips to help navigate these complexities:
- Stay organized: Keep accurate records of your income, expenses, and tax-related documents. This will make it easier to file your tax return and prevent errors or omissions.
- Educate yourself: Stay informed about tax law changes and the latest tax tips to ensure you are taking advantage of deductions and credits.
- Contact the IRS: If you receive a notice from the IRS, do not ignore it. Review the notice carefully, and if you are unsure about what it means or how to proceed, contact the IRS for clarification or consult with a professional.
- Seek professional assistance: If you are facing a complex tax issue, such as dealing with an IRS Letter 1058 or LT11, consider seeking the help of a tax attorney or accountant who specializes in tax resolution. They can provide guidance on your available options and help you take appropriate action.
In conclusion, preventing and addressing tax problems is essential to avoid penalties and interest charges. By understanding how the tax system works and seeking professional consultation when needed, taxpayers can better navigate complex tax issues and maintain compliance with tax laws.
Frequently Asked Questions
What should I do after receiving an IRS Letter 1058?
Upon receiving an IRS Letter 1058, you should act quickly to address the overdue tax payment. You have 30 days from the date of the letter to take action. It’s recommended to contact the IRS or seek professional assistance to discuss payment arrangements or possible resolutions.
What are the consequences if I ignore an IRS Letter 1058?
Ignoring the IRS Letter 1058 can lead to severe consequences, such as levies on your wages or bank accounts or seizure of personal assets. The IRS may also file a Notice of Federal Tax Lien, which can severely impact your credit and prevent you from obtaining loans or using your property as collateral.
How can I prevent property seizure after a Letter 1058 notice?
To prevent property seizure after receiving a Letter 1058 notice, you must address your tax debt promptly. Contact the IRS or consult with a tax professional to explore available options, such as setting up a payment plan, submitting an Offer in Compromise, or requesting a temporary delay in collection activities due to financial hardship.
Can I appeal the decision mentioned in IRS Letter 1058?
Yes, you can appeal the decision mentioned in the IRS Letter 1058. If you disagree with the tax liability or believe there are errors, an appeal should be filed within the 30-day timeframe specified in the letter. It is a good idea to consult with a tax professional to ensure you present the best case for your appeal.
What is the difference between Letter 1058 and CP2000?
While Letter 1058 is issued when you have failed to pay an existing tax debt despite prior notifications, a CP2000 is an initial notice that informs you of a discrepancy between the information provided on your tax return and the data reported to the IRS by third parties (such as employers, banks, etc.). A CP2000 is not a bill but rather a proposed adjustment to your tax return.
What information is typically included in an IRS Letter 1058?
An IRS Letter 1058 typically includes information about your outstanding tax debt, a request for overdue payment, and a notice of the IRS’s intent to seize your property or rights to property if the issue is not resolved within the specified time. Additionally, the letter will provide instructions for contacting the IRS and an explanation of your rights, including the right to appeal.
