IRS notices, audits, collections and appeals (US federal)

Figures are for tax year 2026. Dollar amounts, fees and rates below are the ones the IRS publishes for 2026 or shows on its pages as of September 2026. A short section covers 2025 returns, which are still being filed on extension until 15 October 2026. This Guide is procedure: how to read an IRS notice, which deadline it starts, and which route (response, payment plan, offer, hearing, appeal or court) fits the client. It covers individuals and small businesses on federal income tax. It does not decide the underlying tax.

To talk to the IRS for a client, a practitioner needs Form 2848, which authorises a person eligible to practise before the IRS to represent the client (About Form 2848), or Form 8821, which only lets the named person inspect or receive the client's information (About Form 8821).

Ask the client first

• Every IRS letter received, with its notice number (top right, e.g. CP2000, CP14, CP504, LT11, Letter 1058, Letter 3172, CP3219A) and its date. Deadlines run from the notice date, not the day it arrived.
• Which tax years and forms are involved, and whether any return is still unfiled. Most relief (payment plans, offers) needs all required returns filed.
• Whether the client agrees the tax is owed. Disputing the amount and paying it over time are different routes.
• Whether a payment plan, offer in compromise or bankruptcy is or was in place, and whether a plan ever defaulted.
• Monthly income, basic living costs and assets (bank, vehicles, home equity, retirement accounts), if the client cannot pay in full.
• For a joint return: whether the problem comes from the other spouse's income or deductions, and whether the spouses are now divorced, separated or living apart.
• Whether the client lives or has lived outside the United States for 6 months or more, or served in a combat zone (both change deadlines or the collection clock).
• Whether a special agent or anyone from IRS Criminal Investigation has made contact. If so, stop and refer (see "When to refuse or refer").

The method, step by step

1. Identify the notice and its clock. Read the notice number, date, tax year and amount. Use the notice table below to find the legal effect and the deadline. Calendar the deadline the same day. If a Collection Due Process (CDP) or Tax Court deadline is close, file first and build the case afterwards.
2. Get authority and the facts. File Form 2848 or 8821. Pull the account, wage-and-income and return transcripts for every open year. From the account transcript take the assessment date for each year (this starts the 10-year collection clock) and any suspension events. Never work from the notice balance alone.
3. Decide whether the tax is right. If the proposed or assessed tax is wrong, dispute it by the route the notice allows (CP2000 response, audit protest, Tax Court petition, math-error abatement request). If it is right, go to step 4.
4. Fix compliance. File any missing returns and bring current-year payments up to date. Without this, the IRS will not grant a payment plan online or process an offer.
5. Compute the collection picture. For each year: balance, penalties by type, and the collection statute expiration date (CSED) adjusted for suspensions. Check whether penalty relief (AEP, First Time Abate or reasonable cause) removes part of the balance.
6. Choose the route. In order of cost: pay in full; short-term plan (180 days); long-term payment plan; partial-payment plan; currently not collectible; offer in compromise. Compare each against the CSED.
7. File the right form by the deadline and keep proof of the date (fax confirmation, certified mail receipt, upload receipt).
8. Follow up. Calendar every later deadline (IRS decision, 30-day appeal windows, offer compliance for 5 years, payment-plan terms, CSEDs) and re-pull transcripts to confirm the IRS posted what was agreed.

Notices and their deadlines

Notice	What it means	Deadline and effect	Source
CP2000	Proposed change from matching third-party forms (W-2, 1099) to the return. Not a bill, not an assessment.	Respond within 30 days of the notice date, or 60 days if the client lives outside the US. No response means a statutory notice of deficiency.	Topic 652
CP3219A	Statutory notice of deficiency ("90-day letter") from the matching programme.	Tax Court petition within 90 days of mailing, 150 days if addressed to a person outside the US. The IRS cannot extend it. If no petition is filed, the tax is assessed and billed.	CP3219A; IRC 6213
Math-error notices (e.g. CP11, CP12)	IRS corrected a math or clerical error and assessed without a deficiency notice.	Request abatement within 60 days after the notice; the IRS must then abate and use normal deficiency procedures to reassess.	IRC 6213
CP14	First bill for an assessed balance.	Pay by the notice due date, generally 21 calendar days after the notice, or 10 business days if the amount is $100,000 or more. After that, failure-to-pay penalty runs on tax that was not shown on the return.	Failure to pay penalty
CP501 / CP503	Reminders of the unpaid balance.	No new rights. Act before CP504.	Publication 594
CP504	Notice of intent to levy under IRC 6331(d). The IRS can take a state tax refund and start looking for other assets.	Pay or arrange payment immediately. No CDP right yet: the IRS must still send the final notice with hearing rights before levying other assets. A Collection Appeals Program (CAP) appeal is available before action.	CP504; CDP FAQs
LT11 or Letter 1058	Final notice of intent to levy and right to a hearing.	CDP hearing request (Form 12153) within 30 days of the notice date. Later, but within one year: equivalent hearing only.	Publication 594; Publication 1660
Letter 3172	Notice of federal tax lien filing and right to a hearing.	CDP request within the 30 days after the 5-business-day period that follows the lien filing (the letter states the date).	CDP FAQs; Publication 1660
CP59 (no return filed)	IRS has no record of a required return.	File the return immediately, or explain on Form 15103 why none is due. If the client does not file, the IRS may file a substitute return that may not allow deductions and exemptions the client could claim.	CP59; Publication 594
Audit report with 30-day letter	Examination is finished and proposes changes.	Agree, or protest to Appeals by the date in the letter. No protest leads to a statutory notice of deficiency.	Publication 5

CP2000: underreported income (Topic 652)

A CP2000 comes from the Automated Underreporter. It is a proposal: the client can agree, partly agree or disagree.

1. Compare every item on the notice with the return and the wage-and-income transcript. A common false match is income that was reported, but on a different line or schedule.
2. Complete and sign the response form (both spouses for a joint return). Mark agree or disagree and attach a signed statement and documents for each item disputed.
3. If the notice is right but the client has other items to report, send Form 1040-X marked "CP2000" with the response.
4. Send it by the IRS document upload tool, fax or mail to the address on the notice, by the response date. To get more time, send an extension request with a reply.
5. If there is tax due, paying the proposed amount within 30 days stops more interest. If the client cannot pay, they can ask for a payment plan and must still return the response form.

If the IRS gets no response, it sends a statutory notice of deficiency, and from then on the 90-day Tax Court clock controls. Understanding your CP2000 notice

Audits, Appeals and court (Publication 5)

• Protest. After an audit the IRS sends a report and a 30-day letter. A formal written protest is required if the proposed change in tax and penalties for any tax period is more than $25,000; if any one period is over $25,000, the formal protest must cover all periods. If the total for each period is $25,000 or less, a small case request is enough.
• Deficiency notice. If there is no agreement, the IRS issues the statutory notice of deficiency. The client then has 90 days (150 if the notice is addressed to a person outside the US) to petition the Tax Court without paying first. IRC 6213
• Small tax case. If neither the deficiency in dispute nor any claimed overpayment exceeds $50,000 for any one year, the taxpayer can elect small tax case procedure. The decision cannot be appealed. IRC 7463
• Refund route. Alternatively the client pays, files a refund claim, and sues in District Court or the Court of Federal Claims. Suit cannot start until 6 months after the claim (unless the IRS decides sooner) and must start within 2 years of the IRS mailing a notice of disallowance. IRC 6532
• Interview rights. On advance request, the client may audio-record an in-person IRS interview at their own expense. A client who asks to consult a representative mid-interview must have the interview suspended (except under an administrative summons). A representative holding a written power of attorney can attend in place of the client unless the client is summonsed. IRC 7521
• Assessment period. The IRS generally has 3 years after the return was filed to assess. It has 6 years if gross income omitted is more than 25% of the gross income stated on the return, and no limit if no return was filed or the return was fraudulent. IRC 6501
• Costs. A taxpayer who substantially prevails may recover reasonable costs under IRC 7430, subject to conditions (including that the IRS position was not substantially justified and administrative remedies were exhausted). For fees incurred in calendar year 2026 the attorney-fee cap is $260 per hour. Rev. Proc. 2025-32

The collection clock (CSED) (IRM 5.1.19)

The IRS has 10 years from the date of each assessment to collect it (IRC 6502). An audit addition or a penalty can carry its own date. After the CSED, the IRS can no longer pursue that assessment.

Events that suspend or extend the CSED:

Event	Effect on the CSED
Offer in compromise	Suspended while the offer is pending, for 30 days after a rejection, and while a timely appeal of the rejection is in Appeals. For a joint liability, only for the spouse who made the offer.
Installment agreement request	Suspended while the request is pending, for 30 days after a rejection or termination, and while a timely appeal is in Appeals.
Timely CDP hearing request	Suspended from receipt of the request until it is withdrawn or the determination (including court appeals) is final. At least 90 days remain after a final determination. Not suspended for an equivalent hearing.
Bankruptcy	Suspended while the IRS is barred from collecting, plus six months.
Taxpayer outside the US for a continuous 6 months or more	Suspended while outside; the CSED cannot end sooner than six months after the return.
Innocent spouse request	For the requesting spouse: from filing until the 90-day Tax Court period ends or a Tax Court decision is final, plus 60 days.
Combat zone service	Suspended; the IRS example adds 180 days after the service ends.
Military deferment (Servicemembers Civil Relief Act)	Collection may be deferred up to 180 days if military service materially affects ability to pay; the CSED is suspended during military service and for 270 days afterwards.
Form 900 waiver	Extends the CSED; used only with some partial-payment installment agreements.
Suit to reduce the tax to judgment	Suspends during the suit; a judgment gives a new 20-year period.

Overlapping suspensions run at the same time, not one after another. Read the CSED from the account transcript and check it against these events. Before choosing a route, compare the CSED with the proposed plan. An offer or a plan request suspends the clock; currently-not-collectible status is not among the suspension events listed in IRM 5.1.19. Installment agreement suspension rules; IRC 6330; IRC 6503

Paying over time (Payment plans)

Option	Who qualifies	Setup fee
Pay in full now	Anyone	$0; stops further penalties and interest
Short-term plan (180 days or less)	Individuals owing less than $100,000 in combined tax, penalties and interest can apply online	$0
Long-term plan, direct debit	Online for individuals owing $50,000 or less who have filed all required returns	$29 online; $107 by phone, mail or in person
Long-term plan, other payment method	Same	$69 online; $178 by phone, mail or in person
Low-income taxpayer (AGI at or below 250% of the federal poverty level)	Individuals in a long-term plan	Direct debit: fee waived. Otherwise $43, which may be reimbursed if conditions are met
Revise an existing plan	Anyone	$6 online; $89 by phone, mail or in person; $0 for changes to a direct-debit plan
Revise a plan, low-income taxpayer	Individuals meeting the low-income test	$6 online or $43 by phone, mail or in person, either of which may be reimbursed if conditions are met

Rules to check:

• Simple Payment Plan. Individuals with $50,000 or less of assessed tax, penalties and interest who are current with all filing and payment requirements qualify without a collection information statement or lien determination. Businesses qualify at $50,000 or less without trust fund taxes, or $25,000 or less with trust fund taxes ($50,000 or less for an out-of-business sole proprietorship). The IRS says most taxpayers have up to 10 years to pay; a plan that would run past the CSED is a partial-payment case. Simple Payment Plans
• Over $50,000. Either pay the balance down to $50,000 or less first, or apply with Form 9465 and, where its instructions require, Form 433-F, and expect the IRS to set the payment from income and allowable expenses.
• Partial payment plan. If the client cannot pay in full by the collection statute expiration date (generally 10 years), they may qualify for a partial payment installment agreement. It needs full financial disclosure. Publication 594
• While a request is pending, and for 30 days after a rejection or termination (plus any appeal), the IRS generally will not levy.
• Penalty during a plan. For an individual who filed on time, the failure-to-pay penalty drops to 0.25% a month while an approved plan is in place. Failure to pay penalty
• Default. Pay at least the monthly amount, file and pay all later returns on time; a reinstatement fee may apply after default. Refunds are applied to the debt until it is paid. A notice of intent to terminate can be appealed within 30 days. Publication 1660

Currently not collectible (IRS: temporarily delay collection)

If the client cannot pay because of financial hardship, the IRS may place the account in currently-not-collectible (CNC) status. It may ask for Form 433-F, 433-A or 433-B and proof of income, living expenses, bank accounts and assets.

• Most collection stops, but the debt is not forgiven. Penalties and interest keep accruing.
• The IRS may file a lien, apply future refunds to the debt, review the finances later and resume collection if the client's ability to pay improves. There is no fixed period.
• CNC suits clients with low fixed income and no equity, especially near the CSED.

Offer in compromise (IRS: offer in compromise)

An offer settles the debt for less than the full amount. The IRS generally approves an offer when it represents the most the IRS can expect to collect within a reasonable period.

• Eligibility. All required returns filed and estimated payments made; not in an open bankruptcy; a valid extension for the current-year return if applying for that year; employers must have made deposits for the current and past 2 quarters.
• Grounds. Doubt as to collectibility or effective tax administration on Form 656; doubt as to liability on Form 656-L, never submitted at the same time as the others. Form 656-B
• Fee and payments. $205 application fee, non-refundable. Lump-sum offer: 20% of the offer with the application, the rest in five or fewer payments within 5 months of acceptance. Periodic offer: first payment with the application, then monthly while the IRS considers it; the balance is paid within 6 to 24 months.
• Low-income certification. An individual who meets the low-income certification guidelines in Form 656-B sends no fee and no initial or monthly payments while the offer is considered.
• Minimum offer (Form 656-B worksheet). Equity in assets, plus remaining monthly income times 12 for an offer paid in 5 months or less, or times 24 for an offer paid in 6 to 24 months.
• While pending. Other collection is suspended, a lien may be filed, the collection period is extended, and payments are applied to the debt. If the IRS makes no determination within two years of receipt (not counting any appeal), the offer is accepted automatically.
• Refunds. The IRS may keep refunds for returns assessed before the offer is accepted.
• Rejected offer. Appeal within 30 days on Form 13711.
• After acceptance. The client must file and pay every tax on time for five years after acceptance, or the IRS may default the offer and reinstate the original debt less payments, with interest and penalties. Liens are not released until the offer terms are met.

Liens and levies (Understanding a federal tax lien)

• Lien. Attaches to all the client's assets and to assets acquired later. Paying in full gets it released within 30 days. Discharge frees one property; subordination lets another creditor go first; withdrawal removes the public notice (the debt remains).
• Withdrawal with a direct-debit plan (Fresh Start). Available if the client owes $25,000 or less (or pays down to that first), the direct-debit plan pays in full within 60 months or before the CSED, whichever is earlier, the client is otherwise compliant, has made three consecutive direct-debit payments, and has never defaulted on a direct-debit plan. Apply on Form 12277.
• Bank levy. The bank must hold deposits for 21 days after the levy before sending them to the IRS. Use that window to resolve ownership disputes or a release. IRC 6332
• Wage and federal-payment levies. A wage levy continues until the debt is paid, other arrangements are made, the collection period ends or the levy is released; a minimum exempt amount stays with the taxpayer. The Federal Payment Levy Program can generally take up to 15% of federal payments such as Social Security. Publication 594
• Property exempt from levy for 2026: household goods and personal effects up to $11,980; books and tools of the taxpayer's trade up to $5,990. Rev. Proc. 2025-32
• Passport (IRS: passport revocation or denial). For 2026 a "seriously delinquent tax debt" is legally enforceable, unpaid federal tax debt (with assessed penalties and interest) totaling more than $66,000, where the IRS has filed a lien notice and administrative remedies have lapsed or been exhausted, or the IRS has issued a levy. Excluded: debts being paid on time under an approved installment agreement or an accepted offer, debts with a timely requested levy CDP hearing, and debts suspended by an innocent spouse request. The IRS also does not certify accounts in hardship CNC status, pending plan or offer requests, bankruptcy, identity-theft victims or federally declared disaster areas, and postpones certification for combat-zone service. The State Department can then refuse or revoke the passport.
• Principal residence. It cannot be levied unless a US district court judge or magistrate approves the levy in writing. IRC 6334
• Release. The IRS releases a levy if, among other grounds, it creates economic hardship or was issued improperly. Hardship cases can also go to the Taxpayer Advocate Service. Publication 594

Collection Due Process and the Collection Appeals Program (Publication 1660)

• CDP hearing. Request on Form 12153 within 30 days of the LT11 or Letter 1058 (or within the Letter 3172 lien window). Raise every issue: collection alternatives (plan, offer, CNC), lien withdrawal, spousal defences, and the underlying tax only where the client had no earlier opportunity to dispute it. For alternatives, attach Form 433-A or 433-B. CDP FAQs
• Effect. A timely levy CDP request suspends that levy action and the CSED while the hearing and appeals are pending. IRC 6330
• Tax Court review. The client may petition the Tax Court within 30 days of the Appeals determination. Publication 594 says the court may consider a later petition only if the client was diligent and the delay came from extraordinary circumstances beyond their control; do not plan on it. Publication 594
• Equivalent hearing. A request after the 30 days but within one year of the levy notice (for a lien: one year plus 5 business days after the lien filing) gets an equivalent hearing with Appeals. There is no Tax Court review, and the CSED is not suspended.
• Collection Appeals Program (CAP), Form 9423. Faster; available before or after a lien, levy or seizure, and for rejected, modified or terminated installment agreements. There is no Tax Court review of a CAP decision. For some actions the client must first ask for a conference with a Collection manager.

Penalties and interest

Penalty	Rate and rule	Source
Failure to file (IRC 6651(a)(1))	5% of unpaid tax for each month or part month late, up to 25%. If the return is more than 60 days late, the minimum is the lesser of a fixed amount or 100% of the tax: $525 for Form 1040 and 1120 returns due after 31 December 2025 (this includes 2025 returns); $535 for income tax returns required to be filed in 2027 (2026 returns).	Failure to file penalty; Rev. Proc. 2025-32
Failure to pay (IRC 6651(a)(2), (a)(3))	0.5% of unpaid tax for each month or part month, up to 25%. Reduced to 0.25% during an approved plan for an individual who filed on time. Rises to 1% a month if the tax is not paid within 10 days after a notice of intent to levy.	Failure to pay penalty
Both in the same month	The failure-to-file penalty is reduced by the failure-to-pay penalty: 4.5% plus 0.5% instead of 5%.	Failure to pay penalty
Fraudulent failure to file (IRC 6651(f))	15% a month, up to 75%.	IRC 6651
Accuracy-related (IRC 6662)	20% of the underpayment due to negligence or a substantial understatement. Individuals: the understatement exceeds the greater of 10% of the tax required to be shown or $5,000 (the IRS applies 5% instead of 10% if the return claims the section 199A deduction). Corporations other than S corporations and personal holding companies: exceeds the lesser of 10% of the tax required to be shown (or, if greater, $10,000) or $10,000,000.	Accuracy-related penalty; IRC 6662
Valuation misstatements	Substantial valuation misstatement (value or adjusted basis claimed is 150% or more of the correct amount): 20%. Gross valuation misstatement (200% or more): 40% on that portion.	IRC 6662
Civil fraud (IRC 6663)	75% of the part of the underpayment due to fraud.	IRC 6663
Interest (IRC 6621)	Federal short-term rate plus 3 percentage points, set each quarter and compounded daily. The underpayment rate is 7% for July to December 2026. By law interest cannot be removed or reduced unless the penalty is removed or reduced.	Quarterly interest rates; Failure to file penalty

Penalty relief (Administrative penalty relief)

Covers failure-to-file (IRC 6651(a)(1), 6698(a)(1), 6699(a)(1)), failure-to-pay (IRC 6651(a)(2) and (a)(3)) and failure-to-deposit (IRC 6656) penalties, whatever the amount. It does not cover accuracy-related or fraud penalties; for those, no penalty applies to any portion of an underpayment where the client shows reasonable cause and good faith, except for portions from transactions lacking economic substance (IRC 6662(b)(6)) or deductions disallowed under IRC 6662(b)(10). Reportable transaction understatements (IRC 6662A) have a separate, stricter reasonable-cause test that requires adequate disclosure (IRC 6664(c) and (d)).

• Timely compliance history. The same type of return was filed on time for the prior three years (or 12 consecutive quarters), and either no penalty was assessed other than the estimated tax penalty, or a penalty was later removed for reasonable cause or IRS error. Businesses also: failure-to-deposit not waived four or more times in that period, and no penalty for avoiding EFTPS.
• Automatic Exemption from Penalty (AEP), new from summer 2026. For 2025 tax-year returns (Forms 1040, 1065, 1120) and 2026 quarterly returns (Forms 940, 941, 943, 944, 945, CT-1), and later ones, a late original return or payment from a taxpayer with that history is not assessed the penalty, and failure-to-pay does not accrue. No request is needed; the IRS sends a letter. If a penalty was assessed anyway, contact the IRS.
• First Time Abate (FTA). For periods before AEP, and for 2025 tax-year or 2026 quarterly returns that were not considered for AEP, the client must ask: by phone at the number on the notice, by written statement, or on Form 843. The penalty is assessed first and then removed, and failure-to-pay may keep accruing until the tax is paid. IRM 20.1.1.3.3.2.1 describes FTA as relief the first time a taxpayer is subject to these penalties for a single return. IRM 20.1.1
• Not available for returns filed once or infrequently (event-based), the daily delinquency penalty, or information reporting that depends on another filing.
• Reasonable cause is the fallback if the client does not qualify: show good faith and why the obligation could not be met. Document the facts and dates.
• Erroneous written IRS advice. The IRS must abate any penalty attributable to erroneous written advice from an IRS employee if the advice answered a specific written request from the client, the client reasonably relied on it, and the penalty did not result from the client giving inadequate or inaccurate information. Oral advice does not qualify. IRC 6404(f)

Innocent spouse relief (IRS: innocent spouse relief)

Both spouses on a joint return are liable for the whole tax, even after divorce, even if the divorce decree says otherwise, and even if one spouse earned all the income. Form 8857 asks for all three types of relief at once.

• Innocent spouse relief (IRC 6015(b)). An understatement caused by the other spouse's errors that the requesting spouse did not know about. Not available if the requester actually knew, or a reasonable person would have known, of the errors (abuse victims have an exception).
• Separation of liability (IRC 6015(c)). For spouses who are divorced or legally separated, or who were not members of the same household at any time in the 12 months ending on the date the election is filed: pay only their share of the understatement.
• Equitable relief (IRC 6015(f)). When neither of the others applies and holding the requester liable would be unfair; covers underpayments as well as understatements.
• Deadlines. (b) and (c): no later than 2 years after the IRS began collection activities against the requesting spouse. (f): for an unpaid balance, before the collection period under IRC 6502 ends (generally 10 years, subject to suspension); for a refund, within 3 years after the return was filed or 2 years after the tax was paid, whichever is later. IRC 6015; Equitable relief
• Not available for tax on the requester's own income (community-property cases aside), household employment taxes, individual shared responsibility payments, business taxes or trust fund recovery penalties; or where the requester signed an offer or a closing agreement for the same taxes, a court made a final decision denying relief, or the requester took part in a related court proceeding and did not ask for relief.
• Appeal and Tax Court. Appeal an IRS decision within 30 days of the determination letter. A Tax Court petition is due within 90 days after the final determination letter is mailed, and can be filed if the IRS has not decided 6 months after the request.
• Injured spouse is different: Form 8379 recovers the non-debtor spouse's share of a joint refund taken for the other spouse's debt.

Boundaries and exceptions (Payment plans; Publication 5; IRC 7463)

Situation	Rule
Balance exactly $50,000	Qualifies for the online long-term plan and a Simple Payment Plan ("$50,000 or less").
Short-term plan at exactly $100,000	Not available online: the test is "less than $100,000".
Audit change of exactly $25,000 for each period	Small case request is enough; over $25,000 in any period needs a formal protest for all periods.
Deficiency of exactly $50,000 in one year	Small tax case election allowed; over $50,000 for any one year is not.
CDP request after the 30 days	Equivalent hearing only: no Tax Court, no CSED suspension.
CP504 received	Not a CDP notice. Call, arrange payment, or use CAP.
Unfiled returns	No online long-term plan, and no offer. File first.
Offer while in open bankruptcy	Not eligible. Refer to bankruptcy counsel.
Equivalent hearing or CAP decision	No Tax Court review.
Innocent spouse relief for tax on own income	Not available (community-property exceptions only).

Worked cases (Failure to file penalty)

Case 1: CP2000, income already reported. A CP2000 proposes tax on a 1099-NEC the client says was included in Schedule C gross receipts. Match the payer's deposits to the ledger and the Schedule C total. Mark "disagree", attach a signed statement, the ledger report and bank entries, and send it within 30 days of the notice date. Result: the IRS closes the notice with no change, or issues a statutory notice of deficiency that starts the 90-day Tax Court clock. Topic 652

Case 2: choosing a payment plan (Payment plans). An individual, all returns filed, owes $38,000 in assessed tax, penalties and interest. That is $50,000 or less, so they can apply online for a long-term plan, and a direct-debit plan set up online costs $29. A second client owes $62,000: to use the online route they must first pay down $12,000; otherwise they apply on Form 9465 (with Form 433-F if required), and a direct-debit plan set up by mail costs $107.

Case 3: late filing and payment penalties (Failure to file penalty). An individual's 2025 return was due 15 April 2026, had no extension, and was filed on 10 July 2026 showing $10,000 of tax, none paid. It is 3 months late and more than 60 days late. The client had a failure-to-file penalty on the 2023 return, so neither AEP nor FTA applies.

• Failure to pay for 3 months at 0.5%: $150.
• Failure to file for 3 months at 4.5% (5% reduced by the 0.5% failure-to-pay each month): $1,350.
• Minimum penalty test: the lesser of $525 and 100% of the tax is $525. That is below $1,350, so the minimum does not change the result.
• Penalties so far: $1,500, plus interest. Failure-to-pay keeps running until the tax is paid.

Case 4: CDP deadline (Publication 594). An LT11 is dated 5 October 2026. Form 12153 must be sent within 30 days of the notice date, by 4 November 2026. A request sent on 5 November 2026 gets only an equivalent hearing, which can be requested until 5 October 2027.

Case 5: Tax Court deadline (IRC 6213). A statutory notice of deficiency is mailed on 1 September 2026 to a client in Ohio: the petition is due 30 November 2026 (90 days). Had it been addressed to the client in Portugal: 29 January 2027 (150 days). The petition deadline printed on the notice controls if it is later.

Case 6: offer payments (Offer in compromise). A client offers $20,000 as a lump sum. The application goes with the $205 fee and 20% of the offer, $4,000. The rest is paid in five or fewer payments within 5 months of acceptance. If the client meets the low-income certification guidelines, neither the fee nor the $4,000 is sent with the application.

Case 7: CSED after a rejected offer (IRM 5.1.19). Tax assessed on 1 June 2020 has a base CSED of 1 June 2030. An offer was pending from 1 March 2025 until it was rejected on 31 August 2025, and the client did not appeal. The CSED is suspended for the pending period plus the 30-day appeal window, which moves it roughly seven months, to about the end of December 2030. Take the exact date from the transcript (TC 480 and TC 481).

When to refuse or refer

• Any contact from IRS Criminal Investigation, a special agent, or facts suggesting fraud: refer to a criminal tax attorney before anyone speaks to the IRS.
• Bankruptcy, filed or planned: refer to bankruptcy counsel (it suspends the collection clock and changes which taxes survive).
• Trust fund recovery penalty (IRC 6672) defence, employment-tax liability disputes and whistleblower claims: refer to a specialist.
• International information-return penalties, FBAR and FATCA penalties: refer to an international tax specialist.
• State tax collection: outside this Guide; follow the state's own procedures.
• Tax Court litigation beyond filing a timely petition, and refund suits: refer to a practitioner admitted to the relevant court.
• The client wants to leave assets or income off a collection information statement: refuse. The statements are signed under penalty of perjury.

Filing and payment steps with deadlines

Action	Form or channel	Deadline
Authorise representative	Form 2848 or 8821	Before calling the IRS for the client
Answer CP2000	Response form, upload tool, fax or mail	30 days from the notice (60 days if outside the US)
Abate math-error assessment	Written request	60 days after the notice
Protest audit report	Formal protest or small case request	Date in the 30-day letter
Petition Tax Court on a deficiency	Petition to the US Tax Court	90 days from mailing (150 days if addressed outside the US)
Request CDP hearing	Form 12153	30 days from the LT11 or Letter 1058; the Letter 3172 date for liens
Equivalent hearing	Form 12153	One year from the levy notice
Petition Tax Court after CDP	Petition	30 days from the Appeals determination
Payment plan	Online account, or Form 9465 (with 433-F if required)	Any time; before a levy if possible
Appeal plan termination	Publication 1660 procedures	30 days from the notice of intent to terminate
Offer in compromise	Form 656 with Form 433-A (OIC) or 433-B (OIC), fee and payment	Any time, once all returns are filed
Appeal rejected offer	Form 13711	30 days from rejection
Innocent spouse	Form 8857	2 years after collection began for (b) and (c); collection or refund period for (f)
Penalty relief (FTA or reasonable cause)	Phone, written statement or Form 843	As soon as the penalty notice arrives
Bank levy	Call the number on the levy; Taxpayer Advocate for hardship	Within the 21 days the bank holds the funds

2025 returns filed in 2026. Extended 2025 individual returns are due 15 October 2026. For a 2025 return filed more than 60 days late, the failure-to-file minimum is $525, and AEP can apply (2025 is its first year). Returns for 2026, filed in 2027, carry a $535 minimum. Rev. Proc. 2025-32

Completion checklist

• Every notice logged with number, date, tax year and deadline; the earliest deadline is calendared.
• Form 2848 or 8821 filed and posted.
• Account, wage-and-income and return transcripts pulled for all open years.
• Assessment date and CSED computed per year, with suspensions checked.
• Unfiled returns filed; current-year payments on track.
• Disputed tax challenged by the correct route before its deadline.
• AEP, FTA and reasonable cause checked for every failure-to-file, failure-to-pay and deposit penalty.
• Collection route chosen and compared against the CSED; fees and payments taken from the current IRS page.
• Proof of filing kept for every deadline-sensitive submission.
• Follow-up dates calendared: IRS decisions, 30-day appeal windows, plan terms, 5-year offer compliance.