IRS Notice CP518 is a critical collection notice informing you that the IRS intends to seize your property or assets (a levy) because you have an outstanding tax debt, specifically related to certain business taxes or the Trust Fund Recovery Penalty (TFRP). This is typically the final warning before the IRS takes enforcement action, making immediate response essential to protect your assets.
Response Deadline
30 days from the date on the notice. This is the deadline to request a Collection Due Process (CDP) hearing by filing Form 12153, which is the only way to automatically stop the levy action before the IRS begins seizure.
Receiving Notice CP518 means your tax account is seriously delinquent, and the IRS has completed all required steps to legally begin seizing your property, bank accounts, wages, or other assets to satisfy the debt. This notice is often issued after the IRS has assessed the Trust Fund Recovery Penalty (TFRP) against responsible individuals for unpaid payroll taxes (Form 941 liabilities). It serves as the official 'Final Notice of Intent to Levy and Notice of Your Right to a Hearing.' The IRS is giving you one last chance to resolve the debt—either by paying it, setting up a payment plan, or filing an appeal—before they proceed with enforced collection actions. If you ignore this notice, the IRS can proceed without further warning, potentially freezing your bank accounts or garnishing your wages. It is crucial to understand that this is not a bill, but a high-priority threat of enforcement.
You received CP518 because you have a significant, overdue tax liability, and previous attempts by the IRS to collect the debt have failed. Common reasons include: 1. Failure to pay assessed business taxes, such as unpaid payroll taxes (Form 941 liabilities). 2. Assessment of the Trust Fund Recovery Penalty (TFRP) against you as a responsible person for a business's unpaid trust fund taxes. 3. Ignoring prior IRS collection notices (like CP501, CP503, CP504, or Letter 1058), which warned of the impending levy action. 4. Failure to respond to or comply with the terms of a previous Installment Agreement or Offer in Compromise.
Immediate action is mandatory to prevent seizure of your assets. **Immediate Actions (Within 24-48 hours):** Do not panic, but immediately verify the debt amount and the tax period listed on the notice. Gather all relevant financial records and correspondence. **Short-Term Actions (Within 1-2 weeks):** Contact the IRS using the phone number on the notice, or, preferably, contact a tax professional (CPA or tax attorney) to represent you. Your primary goal is to halt the levy process. You must either pay the balance in full, or request a Collection Due Process (CDP) hearing by filing Form 12153 within 30 days. Filing this form automatically pauses the levy action temporarily. Alternatively, propose a resolution, such as an Installment Agreement (Form 9465) or an Offer in Compromise (Form 656). **Long-Term Considerations:** If the debt is related to TFRP, ensure you understand your rights and liabilities, as this penalty is severe and non-dischargeable in bankruptcy.
Ignoring Notice CP518 will result in immediate and severe enforcement actions. The IRS will proceed with the levy, meaning they can legally seize your property without further notice. Consequences include: wage garnishment (up to 100% of your paycheck until the debt is paid), bank account levies (freezing funds for 21 days before seizure), seizure of vehicles, real estate, and other personal property. Furthermore, interest and penalties will continue to accrue on the unpaid balance, significantly increasing the total debt. Failure to respond also forfeits your right to appeal the levy action through the Collection Due Process (CDP) hearing.
Dexter can guide you through the entire response process step-by-step.
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