Glossary

CP504B Notice

The CP504B notice is sent by the IRS to notify taxpayers that the agency intends to levy federal payments, such as Social Security or other government benefits, to satisfy unpaid taxes. This notice serves as a warning that further enforcement actions will be taken if the taxpayer does not resolve the debt.

Key points in CP504B:

It specifies the amount owed, including any penalties and interest.
The IRS informs the taxpayer that they will levy federal payments unless the debt is paid or a payment arrangement is made.
Taxpayers can still request an appeal or set up an Installment Agreement to avoid the levy.

This notice is one of the last steps before the IRS takes enforcement actions, so it’s critical that taxpayers respond immediately to prevent the levy from being issued.

Recommendation

Tax Credit

A tax credit directly reduces a taxpayer’s tax liability, potentially resulting in a refund or lowering the amount of taxes owed.

CP521 Notice: Monthly Installment Agreement Statement

IRS CP521 Notice is a monthly statement for taxpayers with an installment agreement, outlining payment status and remaining balance.

Letter 681C

IRS Letter 681C confirms the acceptance of a payment arrangement request but clarifies that it is not a formal Installment Agreement.

Offer in Compromise (OIC)

An IRS Offer in Compromise (OIC) allows taxpayers to settle their tax debt for less than the full amount owed based on their financial situation.

Tax Lien

A tax lien is a legal claim placed by the IRS on a taxpayer’s property, giving the government the right to collect unpaid taxes from the property’s value.

CP71B Notice

The CP71B notice is an annual reminder of an unpaid balance on a taxpayer’s account, including payment options to settle the debt.

Trust Fund Penalty

The trust fund penalty is a personal liability imposed on individuals responsible for collecting and paying payroll taxes but who fail to do so.

Barred Refund Claim

A barred refund claim is a request for a tax refund made after the deadline for claiming the refund has passed, preventing the taxpayer from receiving the refund.

Tax Levy Release

A tax levy release halts the IRS from seizing assets like wages or bank accounts to collect unpaid tax debt, providing temporary relief to the taxpayer.

CP16 Notice: Adjustments Made to Your Return and Overpayment Applied

The IRS CP16 Notice informs taxpayers that adjustments were made to their return and their overpayment has been applied to past due taxes.