Letter 1058: Final Notice of Intent to Levy and Right to a Hearing

Understanding IRS Letter 1058: A Final Warning

Receiving mail from the IRS can be unsettling, but a letter with the number 1058 on it? That’s a signal to take things very seriously. This letter isn’t just a friendly reminder; it’s the IRS’s final warning before they start seizing your assets to cover your unpaid tax debt. It’s crucial to understand what this letter means and what steps you can take.

What Does “Intent to Levy” Actually Mean?

Think of a “levy” as the IRS’s way of saying, “We’re taking what’s owed.” This can involve a variety of your possessions, such as:

• Bank accounts: They can freeze and take funds directly from your checking or savings accounts.
• Wages: Your employer can be ordered to withhold a portion of your paycheck and send it directly to the IRS. This is often called a wage garnishment.
• State Tax Refunds: Any state tax refunds you are due can also be taken by the IRS.
• Other property: This can include other assets like vehicles, real estate, and even personal items.

Basically, if you have unpaid taxes, the IRS has the legal power to seize your assets to settle that debt. Letter 1058 is a key step in that process.

Why Is This Letter Called a “Final” Notice?

The IRS doesn’t usually jump straight to seizing your stuff. Before they send Letter 1058, they’ve likely sent you other notices about your unpaid tax debt. Think of it like this:

• Initial Notice: You missed a tax deadline or made a mistake, and the IRS lets you know you owe money.
• Reminder Notice: The IRS sends additional notices if the tax is not paid.
• Intent to Levy Notice: You receive a letter stating the IRS is starting the process of levying.
• Final Notice (Letter 1058): This is the IRS’s final communication before they start taking assets.

The IRS has to give you proper notice before they take action and Letter 1058 is the “last chance” notification. They are basically saying, “We’ve tried to work with you, but now we are moving forward to collect what’s owed.”

The Important Part: Your Right to a Hearing

Here’s where Letter 1058 becomes more than just a threat – it also provides you an opportunity. The letter explains your right to request a Collection Due Process (CDP) hearing. A CDP hearing is your chance to:

• Explain your situation: You can share why you haven’t paid your taxes and propose alternative payment arrangements to the IRS.
• Challenge the tax assessment: If you believe the tax debt is wrong, you can challenge the assessment during the CDP hearing.
• Discuss options: The IRS will review your case and may agree to payment plans, offers in compromise, or other solutions.

Requesting a CDP hearing is a crucial step if you can’t pay the tax debt in full or disagree with how much you owe. Think of it as your opportunity to have your voice heard before the IRS takes action against you.

How to Request a CDP Hearing

The letter will clearly state the deadline for requesting a CDP hearing. You’ll typically need to:

• Respond in writing: You must submit your request in writing within the timeframe provided in the letter.
• State your reasoning: Explain why you’re requesting the hearing.
• Mail it correctly: Follow the instructions in the letter and mail your written request to the specified address.
• Keep copies: Make copies of everything you send the IRS for your records.

It is incredibly important to meet the deadline listed in the letter for requesting a CDP hearing, otherwise, you may lose your right to request the hearing.

What happens if you don’t request a hearing?

If you don’t request a hearing by the deadline, the IRS can proceed with the levy without further communication, and you’ll lose your opportunity to discuss your options. The IRS may not be required to provide any additional notice before they take action, so it is critical to take this seriously.

Common Scenarios & Examples

Let’s look at some examples of situations where Letter 1058 might arrive:

• Scenario 1: Small Business Owner: A small business owner has been struggling to keep their business afloat and has fallen behind on their estimated tax payments. After many notices, they receive Letter 1058.
• Scenario 2: Recently Divorced Individual: Someone recently went through a divorce and realized they owed taxes due to their settlement but haven’t been able to pay. The IRS sent a number of notices and then sent the final notice of intent to levy, Letter 1058.
• Scenario 3: Back Taxes: An individual did not file their taxes for a few years and is now getting collections notices with Letter 1058 being the final notice to take action.

In each of these scenarios, the key takeaway is that Letter 1058 is a critical juncture. It’s not the end of the road, but it demands immediate action.

Tips for Handling Letter 1058

Here’s some practical advice:

1. Don’t Ignore It: Ignoring the letter will not make the problem go away. It will only make things worse. The IRS has legal power to seize your assets.
2. Read it Carefully: The letter is often dense and filled with legal jargon. Read it closely, underline important dates and information and keep a copy for your records.
3. Request a CDP Hearing: If you’re eligible and want to explore your options or challenge the tax assessment, request a CDP hearing by the deadline.
4. Gather Documents: Start compiling all your relevant tax paperwork: tax returns, payment records, and any information that relates to the tax debt.
5. Contact a Tax Professional: Enlist the help of a qualified tax professional such as a tax attorney, CPA, or Enrolled Agent. This is often the best action to ensure you get the best possible outcome.
6. Communicate with the IRS: If you cannot afford a tax professional, try to contact the IRS directly and see if you can negotiate a payment plan or alternative solution. This is not always successful, but it is worth a try.

Mistakes to Avoid

Many taxpayers unintentionally make mistakes that can hurt their chances of resolving the issue. Here are a few you should avoid:

• Missing the Deadline: Missing the deadline to request a CDP hearing is a serious error. Once you lose your right to a hearing, it is difficult to reinstate.
• Not responding: Ignoring the letter and not responding in a timely manner can escalate the issue and the IRS can take collection actions without a hearing if you miss the deadline.
• Providing Inaccurate Information: Lying to the IRS can lead to bigger problems. Always be honest and forthright in your dealings with them.
• Procrastination: Do not wait to start gathering information and take action. Time is of the essence when you receive a Letter 1058.

In Conclusion

Letter 1058, the IRS’s “Final Notice of Intent to Levy and Right to a Hearing”, is a serious matter but it’s not the end of the world. This letter clearly indicates the IRS is about to start collection actions to settle an unpaid tax liability. You have the right to request a hearing to dispute the proposed levy. By acting promptly, understanding your rights, and seeking help when necessary, you can navigate this challenging situation and work toward a positive resolution. Remember, ignoring the IRS won’t make the problem disappear; it’s better to face it head-on with the right knowledge and support.