Receiving a letter from the IRS is rarely a welcome event, but a CP90 Notice is one of the most serious communications a taxpayer can get. It’s a clear signal that the IRS’s patience has run out and their collection process is escalating to its most aggressive stage: asset seizure.

The Background of the CP90: The Final Step in the IRS Collection Process

A CP90 Notice doesn’t appear out of the blue. It is the culmination of a series of automated notices sent by the IRS over several months. Typically, the sequence begins with a CP14 (Balance Due), followed by reminders like the CP501, CP503, and finally the CP504 (Notice of Intent to Levy).

In my practice, I’ve seen many clients who, due to moving, personal hardship, or simple avoidance, have ignored these earlier letters. They often mistake them for standard bills. The CP90, however, is different. It is sent via certified mail and carries the full weight of the IRS’s legal authority under Internal Revenue Code (IRC) Section 6330. It officially starts a 30-day countdown before the IRS can legally take your property.

How a CP90 Notice Works: Decoding the Letter Step-by-Step

When a client brings me a CP90, the first thing we do is break it down section by section. Understanding its components is the first step to forming a response strategy.

Your CP90 notice will clearly state:

  1. The Amount Due: This is the total tax, penalties, and interest the IRS claims you owe.
  2. The Tax Period(s): It specifies which tax year(s) the debt is from.
  3. The Deadline: This is the most crucial piece of information. It will give you a date, exactly 30 days from the date on the notice, by which you must act to prevent a levy.
  4. Your Appeal Rights: The notice explains your right to request a Collection Due Process (CDP) hearing by filing Form 12153.

What Assets Can the IRS Seize After a CP90 Notice?

Once the 30-day window closes, the IRS has broad power to levy your assets. An IRS levy is different from a lien; a lien is a legal claim against your property to secure a debt, while a levy is the actual seizure of that property.

Based on IRS Publication 594, “The IRS Collection Process,” here are the most common assets the IRS can take:

  • Wages & Income: The IRS can garnish a significant portion of your paycheck. This is a continuous levy, meaning it stays in place until the debt is paid. For clients who are employees, this is often the IRS’s first move.
  • Bank Accounts: The IRS can levy the entire balance of your checking, savings, or investment accounts, up to the amount you owe. They send a notice to your bank, which must freeze your funds for 21 days before sending them to the IRS.
  • Social Security: Up to 15% of your Social Security benefits can be levied under the Federal Payment Levy Program (FPLP).
  • Real Estate & Vehicles: Seizing personal property like a home or car is less common due to the complex legal process, but it is possible for significant tax debts. This is typically a last resort for the IRS.
  • State Tax Refunds: If you are owed a state tax refund, the IRS can intercept it and apply it to your federal tax debt.
  • Business Assets: For small business owners, the IRS can seize accounts receivable, business bank accounts, and physical property.

It’s important to note that some assets, like certain unemployment benefits, workers’ compensation, and some public assistance payments, are exempt from levy.

Your Three Main Options for Responding to a CP90 Notice

When you receive a CP90, you have three clear paths forward. Panicking is not one of them.

  1. Pay the Balance in Full: If you agree with the amount owed and have the means, paying the debt in full will stop all collection actions.

  2. You Agree but Cannot Pay in Full: You can propose a payment plan such as an Installment Agreement or offer an Offer in Compromise.

  3. You Disagree with the Tax Debt: You must formally appeal by requesting a Collection Due Process hearing using Form 12153 within 30 days.

The Critical Importance of the Collection Due Process (CDP) Hearing

The CDP hearing is a right guaranteed by law. Filing for one immediately stops the IRS from levying while your case is under review with the IRS Office of Appeals.

The CP90 Notice and Your U.S. Passport: The FAST Act

Under the Fixing America’s Surface Transportation (FAST) Act, the IRS is required to certify taxpayers with seriously delinquent tax debt (exceeding $62,000) to the State Department, which can affect your passport issuance or renewal.

Common Mistakes to Avoid When You Receive a CP90

  • Ignoring It
  • Missing the 30-Day Deadline
  • Making Unconfirmed Verbal Agreements
  • Sending Partial Payment Without a Plan

Frequently Asked Questions about the IRS CP90 Notice

  • Ignoring the CP90 leads to levy actions.
  • A CP90 is different from a tax lien.
  • Stopping a bank levy once issued is very difficult.
  • Legitimate CP90 notices come via certified mail.

Professional Disclaimer

This content is informational and does not constitute legal or financial advice. Consult a qualified professional for personal guidance.

Authoritative Sources

  • Internal Revenue Service: Understanding Your CP90 Notice
  • Internal Revenue Code § 6330
  • IRS Publication 594: The IRS Collection Process
  • IRS Form 12153: Request for a Collection Due Process or Equivalent Hearing
  • IRS: Revocation or Denial of Passport in Case of Certain Unpaid Taxes