A revenue officer can reach a client's bank account, paycheck, and passport without ever seeing a judge. Knowing which notice triggers which right is the whole game.
Collection is the stage where the IRS has settled how much tax is owed and now wants it paid. It begins with assessment, which means the IRS formally records the tax on its books. After assessing, the IRS sends a notice and demand for payment under IRC 6303 within 60 days. That first collection notice starts the clock on everything that follows.
If the taxpayer doesn't pay, the collection notices escalate. Each notice calls for a different response from you:
TRAP: CP504 says "intent to levy," but it only authorizes a levy on a state tax refund. The Collection Due Process clock starts with LT11 or Letter 1058, not CP504.
A federal tax lien is the government's legal claim against a taxpayer's property for unpaid tax. It arises by operation of law, which means nobody has to file anything to create it.
Common mistakes
- Treating CP504 as the Collection Due Process trigger. CP504 permits only a levy on a state tax refund. The 30-day Collection Due Process window opens with LT11 or Letter 1058.
- Including employer FICA in the TFRP. In a problem like Example 1, candidates add the $38,400 employer match. The penalty covers trust fund taxes only: the withheld income tax plus the employee's share of FICA.
- Running the CSED from the return due date. It runs 10 years from assessment. A 2018 return assessed in 2021 expires in 2031, not 2028.
Bottom line
- CSED: 10 years from assessment, suspended by pending OIC plus 30 days, pending installment agreement request plus 30 days, Collection Due Process, bankruptcy plus 6 months, and 6-month foreign absence.
- Lien arises at assessment; the Notice of Federal Tax Lien only perfects priority against purchasers, security interests, mechanic's lienors, and judgment lien creditors.
- Lien relief: discharge Form 14135, subordination Form 14134, withdrawal Form 12277, release Form 668(Z).
- Levy requires notice and demand, neglect to pay, and a Final Notice 30 days ahead; exemptions are $11,710 (2025) personal effects and $5,860 (2025) trade tools; residence seizure needs court approval.
Exam shortcut
Read the notice name first. "Final Notice of Intent to Levy," "Letter 1058," or "LT11" means 30 days and Form 12153. "CP504" is the decoy; pick the answer that says no Collection Due Process right yet. For any TFRP computation, cross out the employer match before you add. The stem always supplies it, and the wrong answer choice always includes it. For any statute question, ask which statute.
The full lesson (about 4,775 words, 32 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
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