The Internal Revenue Service sends out a series of written notices to taxpayers who are delinquent in repaying back taxes. Generally, the agency issues a CP501 notice first, then a CP502 notice if no action is taken. The next step is sending a CP503 notice, which includes a due date and a short payment window in which taxpayers can repay their tax balance. It's important that individuals who are behind in their taxes learn exactly what a CP503 notice is so that they can take the necessary steps to clear up their account quickly.
What is a CP503 Notice?
A CP503 notice basically serves as written document stating exactly how much money a taxpayer owes and issuing a due date by which the IRS expects to receive it. This notice is only issued after two other notices have been sent but the taxpayer has not contacted the agency about repayment.
The notice includes the current amount due to the IRS, which is a total of the original balance, plus any penalties and interest. A taxpayer who receives a CP503 notice should pay particular attention to the due date, which is generally 10 days after the receipt of the notice.
How to Respond to a CP503 Notice
The best thing to do when you receive a CP503 notice is to pay the balance immediately. If you do not have enough money to pay the full balance, you can establish a free tax payment plan that allows you to submit a portion of your balance due each month. Should you decide to institute a payment plan, you need to contact the agency quickly. You'll only have 10 days after the receipt of the letter before the IRS adds even more penalties and interest charges to your balance.
The absolute worst thing you can do when you get a CP503 notice is to ignore it. If you take no action, the IRS will issue a CP504 notice, which is the final written notice that the agency is required to send you before beginning the process of imposing a tax levy.
What If You Disagree with the IRS Ruling?
If you believe that the IRS has made an error in your case or that your tax return has been incorrectly filed, you can use the contact phone number listed on the notice to file an appeal. Since you may be required to submit written proof of your situation, get your pertinent tax documents and receipts together in case you need to send a copy of them to the agency. Don't forget to contact your tax professional or the CPA who handles your books if you need help.
Receiving a CP503 notice is a signal that you need to clear up your past due tax balance right away. If you follow the instructions in the Response section of the notice, you'll be on your way to solving your tax headache.
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