Certified Mail from the IRS: The wildly profitable act of opening your mail.
To help you answer this question of what to do with certified mail from the IRS or state, and as a result of a client failing to safeguard his Due Process Rights, we are reprinting here the entire text of the Fifth Amendment to the United States Constitution. It reads:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”
Now why is the Constitution important? Read on for the answer.
Why do I quote the Bill of Rights in a tax blog?
Because of what happens:
All too often a client comes to us in a state of panic. Either the IRS or the state taxing authority has levied a wage, pension, Social Security or a bank account. “How can they do this?” they cry. “It is so unfair!” It may indeed be unfair, or unjust, and you may be unfairly targeted — which is why you must protect yourself wherever you can.
The problem is—as we talk further with the client—the sad truth emerges. He had received letters from the tax agency and completely ignored them. Why? These are common answers:
- “I was too scared to open them up,”
- “I couldn’t understand the letters, but it looked scary, so I threw them away.
- “I haven’t been checking my mail in years.”
Are these valid excuses?
Generally, a person who earns money in this country has an obligation to pay federal, state and local taxes. The person is required to file tax returns and remit the balance due, if any. Then for some reason, the person fails to do so and the taxing authority needs to take action. They will at first send out notices and bills. If they do not receive a response—in either the form of a payment, an offer to pay via and installment agreement or a pleading of an inability to pay—they will seek to collect in an enforcement action, such as filing a lien or levying a person’s property. But, before they can do so, they have to comply with the Due Process clause. After all, they propose to take your property.
How do they do that? The first requirement is that they have to give notice. The notice consists of informing you of the debt, your rights of due process including a right to a hearing and a deadline by which you must respond. The second requirement is that when you do respond, they have to follow the procedures that have been established to insure due process. IRS procedures also allow for appeals. Again, there is a requirement to file an appeal within a stated time. The good thing is that they cannot levy while the appeal is pending.
Miss an appeal deadline and your right to tax court or another important time to challenge a debt may be gone forever!
Sounds good! So, what is the problem? The taxing authorities give you notice in writing via the U.S. Mail. For some of the bigger notices, they are sent via certified mail. If the letter is lost or if you have not informed them of an address change, then they still have met the burden of notice. What happens all too often is that the Taxpayer receives—but ignores—the notices. Worse yet, he assumes that if he stays quiet, the problem will go away. When he comes in to us in a panic, we open the letters and find that the time period to respond had long ago lapsed and the client has lost his due process rights.
If you don’t pick up certified letters from the IRS, the IRS doesn’t care one bit. They’ve done their bit!
So, if you miss a deadline, there is nothing you can do, right? Not necessarily so. The IRS and the taxing authorities have procedures for releasing levies. The problem is that the procedures require a lot of work on both our and the client’s part in a short period of time. A lot of work in a short period of time merits a substantial fee. Still, doing that is a better alternative to having no paycheck and no money.
The point is you are always in a worse position than if you had protected your own rights in the first place. By responding quickly and getting yourself the adequate legal muscle to protect you, you can prevent or stop federal and state taxing agencies that will try to take your property without a court order.
Always protect your due process rights — especially when it comes to tax. Pick up your certified mail. Always!
So, what should I do? Read the letters! If you don’t understand it, get tax help! If you see the words like Notice of Federal Tax Lien, Notice of Intent to Levy (CP504), Final Notice of Intent to Levy or 30-Day Collection Notice, then immediately contact the tax professional. People get into tough situations with taxes, but if they take action quickly, they most likely can overcome the problem. So can you. Don’t defeat yourself by trying to ignore the problem.