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Notice CP504, Notice of Intent to Levy, Form 9465, Installment Agreement Request | Federal Tax Lien CPA gives tips on the IRS collections and levy process

IRS Notice CP504 CPA tax form 9465 CPA Installment Agreement Request

Notice CP504 begins Round 10 of  the IRS collections and levy process. But you still a few punches left. Do you need a free consult with a federal tax lien CPA accountant? Call the number below. Our virtual office means we can help you with CP504 regardless of where you live. (910) 399-2705.

Federal tax lien CPA accountants sometimes see new clients intimidated by IRS threats to levy their assets. A tax lien means the IRS has first dibs on your assets. The federal tax lien goes on your credit report. Ouch. Levy means seize. Notice CP504, Notice of Intent to Levy, arrives after a string of  escalating IRS notices like CP2000, CP501 etc.  Usually CP504 Notice means the IRS has placed a federal tax lien on your assets, say a bank account, and will levy or squeeze that bank account dry. While this post offers strategies for IRS tax Form 9465, Installment Agreement Request, I’ll offer some advice as an IRS tax lien CPA on the federal tax lien process and how to deal with it.

Have your CPA verify the amount demanded on Notice CP504

I review the underlying tax return(s) to check for accuracy on the Client’s side. On the IRS side I look for substitute tax returns, prepared by the IRS when the client doesn’t file a tax return. Generally I’ll pull the IRS records. Don’t accept the IRS tax demand without checking it first. But the IRS assumes it is correct and you must prove otherwise. Sometimes just providing a correct back tax return takes care of the issue.

File back tax returns

Notice CP504 might be based on tax returns prepared by the IRS. Their substitute tax returns result in a higher dollar demand because they don’t factor in legitimate deductions and tax credit. So that’s how an accurate back tax return can generate a refund.

“Filing back returns covered by Notice CP504 can sometimes turn the IRS demand into a refund. Strange but true, I’ve seen it many times.”
– Gary Bode, Notice CP504 CPA

If you do owe the IRS

So, not every CP504 tax case gets a refund. I always check to see if the client qualifies for an Offer in Compromise, the infamous technique seen on late night TV. The IRS has a tool on their website to pre-qualify if you’re a candidate for an offer in compromise and how much they might accept as full payment. The IRS also has an Installment Agreement. See the Form 9465 instructions. Up to $10,000 is a gimme, that have to accept it. Above that and you have to fill out a financial disclosure form. They’ll go up to 72 months. Sometimes an Installment Agreement is just a move to get more time to work the CP504 back tax case

Don’t Procrastinate on IRS Notices

The IRS stays on the case. There’s a definite timeline. Clients sometimes waste months of valuable defense time before dealing with IRS tax problems.

‘You have three years to claim a refund. I’ve seen a $16,000 potential refund vanish because the client waited three years and two days to file an amended return after being threatened by CP504.”
– Gary Bode, Notice CP504 CPA

So avoiding a federal tax lien is just part of any CP504 solution.

IRS Notice CP504, Notice of Intent to Levy, is limited and doesn’t mention a federal tax lien

Note they’re only threatening to seize you State income tax refund, if any. The timing issues usually prevent this seizure. IRS Notice CP504 is still just a tax bill, albeit with a potential sting and limited timeline.

Federal Tax Lien CPA – use Form 12277

While there’s little sting in IRS Notice CP504 itself, a federal tax lien appears shortly afterwards. The IRS federal tax lien is a public record. It reduces your credit score dramatically. It cuts off multiple avenues previously available to deal with the IRS. It stays on your record for seven years even when you’ve paid your IRS tax bill. Talk to your CPA about getting the IRS to withdraw the lien using tax Form 12277. Sometimes the IRS will withdraw the federal tax lien if the taxpayer still has an IRS tax bill. That’s a cool trick. The usual scenario here is a valid installment agreement, via tax Form 9465, with a good track record of compliance.

Form 9465, Installment Agreement Request 

When clients do have an IRS tax bill, and we can’t lower the amount through an Offer in Compromise, or suspend IRS collection attempts, the answer is an IRS Installment Agreement. The Form 9465 are good. Of course my clients come into our CPA firm owing more tax than the automatic approval levels. But for amounts less than $10,000 it’s an easy fix, except for the actual payments. Tips on Form 9465, Installment Agreement Request:

  • Make the monthly payment as low as possible.
  • Request the longest possible Installment Agreement. The IRS says the term is 60 months or less but 72 months is possible.
  • Make the lowest possible down payment.
  • Save money on the side to payoff the Installment Agreement in full.
  • Paying more down payment or perhaps sending in extra money later doesn’t buy any IRS goodwill. If you miss a payment, you’ve missed a payment. Wait until you can payoff the tax bill completely.

Delaying Tactics with Form 9465, Installment Agreement Request

With self-employed folks like Single Member LLCs and Partnerships, you have to make  your current estimated tax payments for the IRS to accept your Installment Agreement Request. Sometimes we avoid that requirement if we can delay the IRS levy into the beginning of 2015. Don’t try this at home. Get a federal tax lien CPA involved.

If you don’t have a CPA, you probably need one if you’ve received IRS Notice CP504.

Consider calling us at (910) 399-2705. Our virtual office means we can offer world-class service anywhere you live.

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