Notice CP503: The IRS is Getting Serious About Your Taxes Owed
If you owe taxes to the IRS, the agency will send you several notices. Typically, the CP503 is the third notice that individuals receive and the second notice that businesses receive. This notice reminds you of your tax obligation and lets you know that the IRS will forcibly collect the debt if you don’t take action.
To get help with Notice CP503, contact us today. The tax attorneys at the W Tax Group can help you respond to this notice and resolve your tax liability. We provide all of our clients with the individualized attention they need to get the best resolution possible for their unique situations.
What Does IRS Notice CP503 Mean?
The CP503 notice states that you owe unpaid taxes to the IRS. If you don’t respond by the due date, the agency will add additional penalties and interest to your account. The IRS will also start collection actions against you if you fail to respond or pay.
What If You Disagree With Notice CP503?
If you have already paid the tax, contact the IRS and make sure the payment was received. The IRS may have mailed the notice before crediting your payment to your account.
If you disagree with the tax liability shown on the notice, you should follow the instructions to appeal the tax bill. You can appeal unpaid taxes if you believe that they have been assessed incorrectly, but you must follow a very specific appeals process. Contact a tax professional to help you.
If you disagree with the penalties on the notice, you can apply for penalty abatement. The IRS often waives penalties for first-time offenses or if you had a reasonable cause for paying or filing late.
If the tax bill was incurred due to your spouse’s actions, you may qualify for relief through the Innocent Spouse Relief program. This program absolves you of liability if you prove that the tax debt was related to your spouse’s or ex-spouse’s actions. In most cases, you also need to be unaware that your spouse had an additional tax liability, or you need to have been coerced into signing your joint tax return.
What to Do When You Receive This IRS Notice
To avoid incurring more penalties or facing collection actions, you need to respond to this notice. Here are your options if you agree with the tax bill:
Pay the tax in full
Either mail in a payment to the address on the notice or set up an online account to make a payment.
Request a payment plan
You can set up a streamlined payment plan online without providing any financial information if you owe less than $50,000 and can pay off the balance in 72 months. If you owe more than this amount or can’t afford the minimum monthly payment, you will need to submit a condition of financial statement.
Look into a partial payment installment agreement
If you can’t afford to make the minimum required monthly payments on a traditional installment agreement, you may want to consider a partial payment installment agreement. This program allows you to make monthly payments, and then, the IRS writes off the remaining amount of the tax debt once you reach the collection statute expiration date. PPIAs have strict eligibility criteria, and they require a financial statement.
Apply for an offer in compromise
If you cannot afford to pay the tax bill and you don’t have any assets that you can liquidate, the IRS may agree to reduce your tax liability and settle for less than you owe. Getting an offer in compromise is generally only possible if your offer represents the most that the IRS could collect if it enforced collections against you.
Get currently not collectible status
The IRS will stop collection actions against you if you prove that you cannot afford to pay the tax debt. Then, the agency will mark your account as currently not collectible, and it will review your situation every few years to see if anything changes.
Don’t ignore Notice CP503. If the IRS has sent this notice, the agency will get serious about your tax debt if you don’t make arrangements for the unpaid balance. To talk about additional options, contact us directly.
What to Expect When the IRS Sends You Tax Debt Notices
Typically, the IRS sends out notices on a six-week cycle. Once you receive an initial notice about your unpaid balance from the IRS, you should expect to see the next notice in six weeks. The only way to stop this cycle is to make payment arrangements on your back taxes.
If you don’t pay your taxes, the IRS will send you a CP14 notice alerting you about the tax debt. Then, the agency will send a CP501 notice. This is a reminder that you still have unpaid taxes. The CP503 is your last reminder before the IRS starts getting serious.
If you don’t respond to this notice, the IRS will issue a federal tax lien if it hasn’t done so already. A tax lien is the government’s legal claim to your assets, making it impossible to sell or borrow against your assets. The next IRS notice is the CP504. This is the Final Notice of Intent to Levy.
You have 30 days to respond, and if you don’t, the agency will start to levy your assets. The IRS can seize the funds in your bank account, garnish your wages, and levy your real and personal assets. Unlike other creditors, the IRS doesn’t have to get a judgment against you. As long as it sends the proper notices, it can levy nearly any of your assets.
CP503 Vs. CP503H
In some cases, you may receive IRS notice CP503H. Like the standard notice, this is a reminder that you have unpaid taxes. However, this notice is for the shared responsibility payment, which is the penalty for not having health insurance.
Note that as of 2019, the IRS stopped assessing this penalty. However, you may still receive a notice if you owe the penalty for a precious year. The IRS cannot levy your assets or issue liens for the shared responsibility payment, but the agency can seize your tax refunds.
How to Learn More About IRS CP503
If you have questions about this notice, you can reach out to a tax professional directly, or visit irs.gov/cp503. This directs to the IRS web page about this notice. You can also call the IRS.
Unfortunately, however, this letter usually comes from the IRS’s automated collection system (ACS). If you get ACS letters, it means that your account has not been assigned to a revenue agent. As a result, if you call the number on the notice, you’ll get routed to the first person who answers the phone in an IRS call center.
These employees aren’t specifically focused on your account. Typically, the first time they see your account is when you call in and ask for help. That lack of familiarity can often compromise the results that you get. To ensure you find the best solution for your issue, you may want to reach out to a tax professional.
Get Help With Notice CP503
Have you received a CP503 notice? Don’t worry, you still have time to resolve your tax debt before the IRS starts taking your assets or garnishing your wages, but you need to act quickly. If you don’t respond to this notice, you will incur additional penalties, and the IRS will move forward with the collection process.
We can help you respond to this notice and find relief for your tax problems. The IRS has numerous programs to help taxpayers who have gotten behind. We can help you deal with the IRS, and we will exhaust all possibilities to find you the best resolution possible. To learn more, contact us today.