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What is IRS tax resolution?
IRS tax resolution is the process of fixing a problem with the Internal Revenue Service. That problem could be a disputed assessment, a tax debt you cannot pay, years of unfiled returns, or active collection such as a lien or levy. Resolution differs from ordinary tax compliance work. Rather than preparing returns for a completed year, it involves navigating the IRS enforcement and appeals system on behalf of a taxpayer in a difficult situation with the agency.
Many New Jersey taxpayers find themselves facing IRS problems through no malicious intent — a business cash flow crisis led to payroll taxes not being remitted, or years of self-employment income were underreported because no one explained quarterly estimated taxes, or a divorce or life event created income that was simply never reported. The IRS has a range of resolution programs designed to bring non-compliant taxpayers into compliance and resolve outstanding balances in a manageable way — but navigating these programs effectively requires expertise.
ProAxis prepares the responses and filings at every level of the IRS process: correspondence audit replies, examination document packages, Collection Due Process hearing requests, Appeals Office protest letters, and installment agreement and Offer in Compromise applications. We do the same for the New Jersey Division of Taxation, which has its own audit, collections, and dispute resolution processes. When a matter requires formal representation before the IRS, we refer you to qualified representation. We keep preparing the underlying returns and filings throughout.
IRS Problems We Handle
IRS Audits & Examination Response
From simple correspondence audits (CP2000 notices) to full field examinations, we prepare your documentation and draft the responses that support the correct outcome. Every reply goes out accurate, complete, and on time.
Federal Tax Liens
A Notice of Federal Tax Lien attaches to all your property and can damage your credit and prevent asset transfers. We prepare lien withdrawal, subordination, and discharge requests, plus the resolution filings that make lien removal possible.
Bank Levies & Account Seizures
When the IRS levies a bank account, it can seize everything in the account up to the tax debt owed. We act quickly to prepare a levy-release request or a payment arrangement that halts further seizure while a resolution is pursued.
Wage Garnishments
IRS wage garnishments can take a significant portion of your paycheck. We prepare the release request and financial records to reduce or stop the garnishment while setting a compliant path forward.
Unfiled Tax Returns
Years of unfiled returns create serious legal exposure and escalating IRS enforcement risk. We reconstruct income and deduction records, prepare all unfiled returns, and build a resolution plan that addresses the resulting balances.
Penalty Abatement
IRS penalties (failure to file, failure to pay, accuracy-related) can add 20%–25% or more to a tax balance. First-time penalty abatement and reasonable cause abatement can eliminate significant penalties for qualifying taxpayers.
Offer in Compromise
For taxpayers who genuinely cannot pay the full amount owed, an Offer in Compromise allows settlement for less. We conduct a thorough financial analysis to determine whether you qualify and prepare the strongest possible OIC application.
Installment Agreements
An IRS installment agreement allows you to pay your tax debt in monthly payments over time. We prepare the application and propose terms — payment amount and duration — that keep payments manageable while bringing you into compliance.
Innocent Spouse Relief
When a tax problem stems from errors or omissions on a jointly filed return that were attributable to your spouse or former spouse — and you did not know about them — innocent spouse relief can protect you from liability for taxes you did not cause. We evaluate eligibility and prepare the required IRS Form 8857 application.
What should you do when you receive an IRS notice?
Do not ignore an IRS notice, and do not call the IRS before a tax professional reviews it. Every notice has a deadline, and the notice number tells us exactly what the IRS is asserting. Receiving one does not automatically mean you owe more money or are in serious trouble. The IRS sends millions of notices each year, from routine requests for clarification to formal audit notifications. The key is to respond correctly and on time.
Do not ignore it
Every IRS notice has a deadline — either for responding or for paying. Missing the deadline can eliminate your right to appeal or trigger enforcement action. Even if you believe the notice is wrong, you must respond.
Identify the notice type
IRS notices are identified by a number in the upper right corner (e.g., CP2000, CP504, Letter 525). The notice type tells you what the IRS is asserting — a proposed tax change, a balance due, an audit initiation, or imminent collection action.
Do not call the IRS or respond without counsel
Anything you say to the IRS can and will be used in the resolution process. A casual comment about income or assets can create problems that did not previously exist. Let a tax professional review the situation first.
Contact ProAxis immediately
We will review the notice, explain what it means, and develop a response strategy. With IRS Form 8821 (tax-information authorization) on file, we pull your transcripts and see exactly what the IRS sees. Then we prepare the response and any filings the situation calls for.
What does my IRS notice mean?
The notice number in the top corner tells you where you stand. CP14, CP501, and CP503 are balance-due reminders. CP504, LT11, and CP90 mean the IRS is preparing to levy. CP2000 proposes a change based on income reports the IRS already has. CP59 means the IRS has no record of a required return.
| Notice | What it means | Your deadline | First move |
|---|---|---|---|
| CP14 | You owe money on unpaid taxes — the first balance-due bill. | Pay by the due date printed on the notice; interest accrues after it. | Check the notice against that year's return. A CPA can pull your account transcript with Form 8821. |
| CP501 | Reminder — you still have a balance and the IRS has not received payment or a response. | Due date shown on the notice; a federal tax lien can follow. | Gather the notice and return records; confirm the balance before paying. |
| CP503 | Second reminder — the IRS still has not heard from you on the unpaid balance. | Due date shown on the notice; a Notice of Federal Tax Lien may be next. | Same records check — then pick a payment path before a lien is filed. |
| CP504 | Notice of intent to levy — the IRS can seize your state income tax refund and pursue other property. | Pay immediately per the notice; levy of the state refund and a lien filing can follow. | Gather all notices and transcripts now and get payment arrangements moving. |
| LT11 / Letter 1058 | Final notice of intent to levy wages, bank accounts, and other property. | 30 days from the date on the notice (the period starts the day after) to request a Collection Due Process hearing (Form 12153). | Calendar the 30-day date first; then gather records for the hearing request. |
| CP2000 | Income reported by employers or banks does not match your return; a change is proposed — it is not a bill yet. | Reply by the date listed on the notice; silence turns the proposal into a bill. | Match the notice line by line against your W-2s, 1099s, and return before agreeing. |
| CP59 | The IRS has no record of your prior-year personal tax return. | File immediately or explain why no return is required; refund claims have strict time limits. | Pull wage-and-income transcripts (Form 8821) and prepare the missing return. |
| CP90 | Intent to seize assets, with the right to a Collection Due Process hearing; passport denial is possible. | 30 days to request a Collection Due Process hearing (Form 12153). | Calendar the 30-day date; gather transcripts and records right away. |
Summaries follow the IRS "Understanding your notice" pages at irs.gov as of July 16, 2026. Always use the deadline printed on your own notice.
Holding one of these notices right now?
The clock is set by the notice, not by you. Talk it through with a licensed CPA today.
How fast do I need to respond to an LT11 or CP90 notice?
You have 30 days to request a Collection Due Process hearing using Form 12153. The 30-day period starts the day after the date printed on the notice — not the day the letter arrives. Count from the notice date, and mail early enough for the request to be postmarked inside the window. A timely request generally pauses levy action and preserves the right to petition the U.S. Tax Court. After the window closes, only an equivalent hearing is available — for up to one year, with fewer appeal rights.
What should I do if I haven't filed taxes in 3 years?
Start with IRS wage-and-income transcripts. They show every W-2 and 1099 the IRS has on file. A CPA can pull them with Form 8821, a records-only authorization. Under IRS Policy Statement 5-133, the IRS generally asks for the last six years of returns. Filing comes first, even when full payment is not possible.
For the step-by-step process — transcripts, penalty exposure, and NJ specifics — see our full guide on what to do if you haven't filed taxes in years.
What if I owe the IRS more than I can pay?
The IRS offers three main paths. An installment agreement spreads the balance into monthly payments. Individuals owing $50,000 or less can apply online for a long-term plan. An offer in compromise settles the debt for less than the full amount when income, expenses, and assets support it. Currently-not-collectible status pauses collection during hardship, but interest keeps accruing and the debt is not forgiven.
Which path fits depends on the full financial picture. The IRS will not consider an offer in compromise until all required returns are filed. Taxpayers in this spot usually start there.
How does the ProAxis IRS resolution process work?
Each engagement begins with a full review of your IRS account transcripts, filed returns, notices, liens, and current finances. This gives us a complete picture of the problem and the range of solutions before we commit to an approach.
Next, you sign IRS Form 8821 (tax-information authorization), which lets us pull your IRS transcripts and monitor your account. Unlike a Form 2848 power of attorney, Form 8821 is information-only. From there, we prepare the responses and filings the case needs — penalty-abatement requests, installment-agreement applications, and Offer in Compromise packages. If the matter requires formal representation before the IRS, we refer you to a qualified representative and coordinate the handoff.
Throughout the process, we keep you informed with regular updates on the status of your case, explain all options and trade-offs clearly, and ensure you understand and approve any resolution before it is finalized. We never recommend accepting a resolution that is worse than what the law and the facts warrant.
Once a resolution is in place, we also help you establish the tax planning and compliance practices necessary to ensure the problem does not recur. Many taxpayers who face IRS problems get into them partly because of inadequate tax planning — see our tax planning service for how we help clients stay ahead of their obligations.
Frequently Asked Questions
What should I do if I receive an IRS notice?
First, do not ignore it — IRS notices have deadlines, and ignoring one can cause a manageable situation to escalate quickly. Read the notice carefully but do not call the IRS or respond without first consulting a tax professional. Contact ProAxis as soon as possible so we can review the notice, assess the situation, and develop the appropriate response. Many IRS notices are routine and resolved with a straightforward written response; others require more involved action. The notice number in the upper right corner tells us immediately what we are dealing with.
Can you stop a tax lien or levy?
There are established routes to release or delay a bank levy or wage garnishment. They include demonstrating hardship, requesting an installment agreement, or requesting a Collection Due Process (CDP) hearing, which temporarily halts collection action. A federal tax lien is harder to remove outright, but it can be subordinated or discharged in specific circumstances. ProAxis prepares these filings for you to sign and submit, and works under Form 8821 to pull your transcripts and read your notices. ProAxis does not represent taxpayers before the IRS. A CDP hearing, and any negotiation with a revenue officer, require representation under Form 2848 — ProAxis refers those matters to a licensed representative. Deadlines are short. Once a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (LT11, Letter 1058, or CP90) is issued, you generally have 30 days from the date on that notice to request a CDP hearing. A CP504 is the earlier notice of intent to levy. It does not carry the hearing right, but it still needs a prompt response. Contact us right away and we will tell you what we can prepare and who to engage for the rest.
What is an Offer in Compromise?
An Offer in Compromise (OIC) is a formal agreement with the IRS. It allows a taxpayer to settle their tax debt for less than the full amount owed. The IRS accepts OICs when there is doubt as to collectability or doubt as to liability. It also accepts them when collection of the full amount would create an economic hardship. Qualifying requires a detailed financial analysis. The IRS calculates your Reasonable Collection Potential (RCP) based on income, allowable living expenses, and asset equity. It will only accept an OIC that meets or exceeds the RCP. Not everyone qualifies, but when appropriate it can provide significant relief on large tax debts.
How long does the IRS resolution process typically take?
Timelines vary by issue type. A correspondence audit might resolve in 4 to 12 weeks with the right documentation. An installment agreement can often be established within 30 to 60 days. An Offer in Compromise currently takes 9 to 24 months for the IRS to process. A full field audit can run from several months to over a year. Our goal throughout is to keep collection actions suspended where possible. We also move the case forward as efficiently as the IRS timeline allows. And we keep you informed at every stage.