What is an IRS Notice of Intent to Levy (CP 297) and what should you do about it? First things first, relax so you can make sense of the situation. The IRS provides taxpayers with many options whether you can pay the tax debt right now or not. The important thing is to understand what the IRS Notice CP297 entails so you can respond within the given timeframe.
What is an IRS Notice of Intent to Levy?
A notice of intent to levy means that the IRS is planning to seize your property in order to pay your tax debt. The property it can seize includes:
- Money in your bank accounts.
- Payments from clients if you are a contractor.
- Wages from employers.
- Rights to property.
- Property (cars, houses, etc.).
- Social security benefits.
- Personal belongings.
- And more.
Common notices regarding an intent to levy include IRS Notice CP297, LT 1058, CP 90, CP 504, and LT 11.
What should you do if you receive a IRS Notice CP297 from the IRS?
Open the IRS notice right away and read it. It’s important to understand your options and the amount of time you have to respond. Of course, the easiest way to resolve the problem is to pay the amount you owe. However, in most cases, a debt wouldn’t have gotten this far if the taxpayer can just pay it. Being so, here are the 4 other options you have.
1. Installment agreement
The Federal government offers short- and long-term installment agreements. These allow you to pay off your debt over an extended period. However, the IRS does still continue to assess interest and penalties as long as you have a past due amount. You also often have to pay a fee to initiate a payment plan.
The short-term payment plan requires you to pay off your balance in 120 days or less and has no setup fee. You can pay via automatic payments from a checking account, checks, money orders, a credit card, or a debit card.
Installment agreements that extend longer than 120 days are considered long-term. The payment method you choose and how you apply will determine your setup fee.
- Online application for a long-term installment agreement with direct debit: $31 setup fee
- In person, phone, or mail application for a long-term installment agreement with direct debit: $107 setup fee
- Online application for long-term installment agreement without direct debit: $149 setup fee
- In person, phone, or mail application for a long-term installment agreement with direct debit: $225 setup fee
Note fee waivers and reimbursements are available for low-income taxpayers.
To apply online, you must meet certain qualifications. Learn more here.
Offer in Compromise (OIC)
An OIC allows you to settle your debt by paying only a portion of what you owe. If paying your tax debt will create a financial hardship, your OIC may get approved. The IRS will look at your overall financial situation to determine if your OIC is the most they are likely to get from you.
In order for the IRS to consider your offer, you must:
- File all of your tax returns.
- Have received a bill for at least one tax debt on your offer.
- Make all the required estimated tax payments or deposits for the current year (if applicable).
Learn more about OICs.
Currently Not Collectible (CNC) status
If you can not pay your tax at the moment and can prove it to the IRS, they can place you on CNC status. It means collection efforts will stop at the current time until your situation changes.
If you disagree with the amount owed on IRS Notice CP297, you have the right to a hearing. To get one, file an appeal within 30 days. The deadline will be on your IRS Notice CP297. At your hearing, you will protest the amount and make your case.
An appeals officer will make a judgment based on the hearing and you will get a result. If successful, the amount owed will be adjusted as per your case. Otherwise, the letter of determination will explain the outcome. If you disagree with the letter of determination, the next step is to appeal to the U.S. Tax Court.
Learn about other IRS notices and letters.
Get professional tax help
Handling tax problems can be confusing and stressful. Further, if not done carefully, you can end up facing a financial hardship or criminal charges. By hiring an experienced tax expert at a tax relief firm, you can get professional support to ensure your interests are protected. Further, they can help you to choose the best way to respond to IRS letters and notices.
Review and compare top tax debt relief firms below.
Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar, Interest.com, Commonbond, Bankrate, NextAdvisor, Guardian, Personalloans.org and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.