IRS Emergency? What to Do in the First 24 Hours

Something just happened. Your debit card was declined because the bank froze your account. Your paycheck came in short. A letter arrived by certified mail with the words "Final Notice" across the top. Or a person with an IRS badge knocked on your door.

Take a breath. The IRS collection system runs on paper and deadlines. Almost every action it takes comes with a notice, and almost every notice tells you how long you have to respond. Your job in the first 24 hours is not to solve the whole problem. It is to figure out exactly what you are dealing with, find the deadline, and protect it. Here is the order I would handle things in.

Step one: gather every piece of IRS paper you have

Find every envelope, notice and letter from the IRS, including the ones you set aside unopened. Put them in date order. On each one, look for three things:

• The notice or letter number. It is usually in the top or bottom right corner, such as "LT11," "Letter 1058," "CP504" or "Letter 3172."
• The date of the notice. Many deadlines run from the date printed on the letter, not the day you opened it.
• The tax years and the amount. You need to know which periods are involved.

If something happened without a letter in your hands, such as a frozen account, the IRS almost always sent something earlier. Look for it. If you cannot find it, the IRS can tell you what was sent and when.

Step two: match what happened to the list below

Find your situation. Each one has a different clock and a different first move.

Your bank account was frozen (bank levy)

The clock: Under Section 6332(c) of the Internal Revenue Code, a bank must hold levied funds for 21 days before sending them to the IRS. Only money in the account when the levy arrived is caught. Deposits made afterward are not.

First step: Call the number on the levy notice today and ask what it takes to release the levy. Read using the 21-day hold before you call.

Your paycheck was garnished (wage levy)

The clock: Your employer received Form 668-W. According to the Internal Revenue Manual, the employer gives you a statement of your filing status and dependents to fill out and return within three days. If you miss it, your exempt amount is figured as if you were married filing separately with no dependents, which is the smallest exemption.

First step: Get that statement from payroll and return it right away. Then read what to do when the IRS is taking your paycheck.

You received a final notice of intent to levy (LT11, Letter 1058 or CP90)

The clock: These are Collection Due Process notices. Under Section 6330 and Treasury Regulation 301.6330-1, you have 30 days, starting the day after the date on the notice, to request a hearing with the IRS Independent Office of Appeals in writing, usually on Form 12153. A timely request generally suspends the levy while the hearing is pending.

First step: Mark the 30th day on your calendar and plan to mail the request well before it. See the final notice of intent to levy guide.

A CP504 is a different, earlier notice of intent to levy. It is serious, but it is not the Collection Due Process notice. See what to do about a CP504.

You received a notice of deficiency (the 90-day letter)

The clock: Under Section 6213(a), you have 90 days from the mailing date to file a petition with the U.S. Tax Court, or 150 days if the notice is addressed to you outside the United States. The notice states the last day to file. This deadline is unforgiving.

First step: Find the "last day to petition" date on the letter. Read the 90-day letter guide.

The IRS filed a tax lien (Letter 3172)

The clock: Under Section 6320, the IRS must send this notice within five business days after filing the lien. You then have a 30-day window, starting the day after that five-business-day period, to request a hearing. The letter gives the date.

First step: Decide whether to request a hearing. See the Letter 3172 guide, and if you are trying to sell or refinance, when a lien blocks a home sale.

A revenue officer came to your home or business

The clock: There is no single statutory deadline. Revenue officers set their own deadlines for financial statements, such as Form 433-A, and for missing returns. Those dates matter, because missing them is often what leads to levies.

First step: Get the officer's name, phone number and any deadline in writing. You do not have to answer detailed questions on the spot. See what to do when a revenue officer is at your door.

You were served with a summons

The clock: The summons states a date and place to appear. That is your deadline.

First step: Do not ignore it, and do not walk in unprepared. Read the IRS summons guide.

You received Letter 1153 (Trust Fund Recovery Penalty)

The clock: According to the Internal Revenue Manual, you have 60 days from proper delivery of the letter (75 days if it is addressed to you outside the United States) to file a protest before the IRS assesses the penalty against you personally. Section 6672(b) requires the letter to precede any bill by at least 60 days.

First step: Do not sign Form 2751, the agreement to the penalty, until you understand it. See the Letter 1153 guide.

Your passport was denied or revoked

The clock: Section 7345 lets the IRS certify a "seriously delinquent tax debt" to the State Department. The threshold starts at $50,000 and is adjusted for inflation each year, so check the current figure. Certification does not apply to a debt being paid on time under an installment agreement or an accepted offer in compromise, and the IRS must notify the State Department within 30 days after such an agreement is made.

First step: Find out whether a payment arrangement can take the debt out of that category. See the passport guide.

Something seized, or a business account hit

If the IRS took a car, real estate or other property, see IRS seizures of property. If it levied your customers or your business bank account, see levies on business accounts and receivables. If your Social Security check is being reduced, see Social Security levies.

Step three: confirm it is really the IRS

Scammers love panic. The levy and lien procedures described above all require written notice from the IRS, so real collection leaves a paper trail. If a call, text or email is your only "notice," stop and verify it before you pay anything. See how to tell if an IRS contact is a scam.

Step four: write down your deadline and protect it

Once you know which notice you have, write the deadline in large print where you will see it every day. If you are mailing something with a deadline, send it by certified mail and keep the receipt. All of the deadlines are collected in the IRS deadlines you cannot miss.

What not to do

• Do not ignore the letter. The deadlines run whether or not you open the envelope.
• Do not empty your accounts in a panic or move assets to relatives. It rarely helps and can create new problems.
• Do not guess at the deadline. Read the date on the notice. Some deadlines count from the notice date, some from delivery, some from a filing date.
• Do not give a revenue officer a financial statement you have not checked. It is signed under penalty of perjury.
• Do not pay a "tax relief" company because of a frightening phone call or radio ad. Verify who you are dealing with first.

Getting help today

Most IRS emergencies have a solution. The ones that go badly are usually the ones where a deadline passed while the taxpayer was frozen with worry. If you have a levy in place, a hearing deadline running, or an officer waiting on documents, this is the time to bring in a tax attorney who handles IRS collection matters.

The Law Offices of Darrin T. Mish, P.A., in Tampa, focuses on IRS collection problems like these. You can learn more at GetIRSHelp.com or call (813) 229-7100. Bring every IRS letter you have. The notice numbers and dates tell us where to start.