To help you answer the question of what to do with certified mail from the state or the IRS, and as a result of a client failing to safeguard his due process rights, I’ve decided to remind readers of the Fifth Amendment to the United States Constitution and the implications it has for tax purposes. It reads as follows:
“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.”
Alright, we all know that the Constitution is important. But does it really have any substantial impact when it comes to taxes?
Why would I quote the Bill of Rights in a tax blog?
Thanks to the Fifth Amendment, you cannot be deprived of your life, your liberty, or your property without the proper steps being taken against you. It is important to note that those things can be taken. You can (depending on what state you live in) be deprived of your life; you can lose your freedom as you’re incarcerated; and you can definitely have your property seized from you. But, and this is the important bit, these things can only happen after the proper steps have been implemented (this is known as due process). If those steps aren’t properly performed, then you should be able to rest easy knowing that your life, liberty, and property are yours.
Does this always work out perfectly? Of course not. There are bound to be oversteps, mistakes, and other general problems. But, thanks to the language of the law, you can know that the Constitution is on your side. So, back to the question in the heading, why would I quote the bill of rights in a tax blog? The answer is pretty simple – the IRS can’t take your property without going through the due process. Unless the proper steps are made, they can’t levy your bank accounts, garnish your wages, or go after you with collections.
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, but this is why you must protect yourself by opening your certified mail from the IRS.
Being scared is normal
Here’s the unfortunate reality – often, as we get further into our talks with a client, the sad truth emerges: they received certified mail from the IRS and completely ignored it. Why? Here are some common answers that might seem all-too-familiar:
- “I was too scared to open them up.”
- “I couldn’t understand the letters, but they looked scary, so I threw them away.”
- “I haven’t been checking my mail in years.”
Are these valid excuses for not opening certified mail from the IRS? No. It’s a simple and straightforward answer, but none of these reasons will get you off the hook with the IRS. Being scared in this kind of situation is normal, but you absolutely cannot allow it to stop you from resolving your problem.
Generally, a person who earns money in the United States 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. And if, for some particular reason, the person fails to do so, it falls to the taxing authority to take action. We should all be on board up to this point. These are the basics of the taxation system that we have been a part of from the first time we got a W2.
The taxing agency will first send out notices and bills in the form of certified mail. If the IRS does not receive a response — in either the form of a payment, an offer to pay via an 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 are proposing to take your property.
What steps do they have to take to be in compliance? The first requirement is the IRS has to give notice. The notice consists of informing you of the debt, your right 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, the IRS will have to follow the procedures that have been established to ensure your right to due process. One of these procedures is your right to appeal. Again, there is a limited amount of time; you are required to file an appeal within a stated time. The good thing is that your finances cannot be levied while the appeal is pending.
Miss an appeal deadline and your right to challenge a debt may vanish
Keeping the IRS from levying your finances as you appeal sounds pretty good! So, what’s the problem? Well, you will be given notice in writing via mail. For some of the bigger notices, they are sent via certified mail from the IRS. If the certified mail is lost or if you have not informed the IRS 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 certified mail from the IRS. Worse yet, s/he assumes that if they stay quiet, the problem will go away by itself. When the client comes to us in a panic, we open the letters and find that the time period to respond has long since lapsed and the client has lost their due process rights.
If you don’t open up certified letters from the IRS, they have a massive leg up just by informing you. They’ve done what’s required of them and the law is on their side at this point.
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 significant amount of work for both the legal representation and for the client in a very short period of time. A lot of work in such a limited time-window merits a substantial fee. Still, in most cases, the fee is a better alternative to the IRS siphoning your paychecks and bank accounts.
The point is that by not opening your mail, you will be in a worse position than if you had protected your rights in the first place. By responding quickly and getting yourself the adequate legal muscle to be protected, you can prevent or stop federal and state taxing agencies from taking your property without a court order.
Protect your rights; open your certified mail!
So, what should I do? I can’t emphasize this enough: read the letters! If you don’t understand the contents of these letters, you’re going to want to get tax help. If the letters contain words like Notice of Federal Tax Lien, Notice of Intent to Levy (CP504), Final Notice of Intent to Levy, or 30-Day Collection Notice, you need to immediately contact a tax professional.
People get into tough situations with taxes, but if they take action quickly, they give themselves the best chance for overcoming the problem. Take a deep breath and open your mail from the IRS. It might be frightening, but the consequences are a hundred times worse. Don’t defeat yourself by trying to ignore the problem. And, if you find yourself overwhelmed and uncertain of how to proceed, don’t hesitate to ask for help.