IRS Notice CP92 Explained: What It Is and What To Do

IRS Notice CP92 is the Notice of Seizure of Your State Tax Refund and Your Right to a Hearing.

This notice is known as a post-levy notice because the IRS only sends it after it has taken levy action against you — in this case, to seize the refund amount shown on your recently filed state income tax return.

The IRS sends the Notice CP92 via certified mail.

Here is the redacted version of a Notice CP92 that the IRS sent one of our clients.

The State Income Tax Levy Program

Each state with an income tax can sign an agreement with the IRS to allow a taxpayer’s state income tax refund for that state to be applied to the taxpayer’s outstanding federal income tax liability.

Of the 42 states (including the District of Columbia) with an income tax, only Hawaii, Montana, and North Dakota do not participate in this state income tax levy program.

Your Right to a Hearing

Notice CP92, in addition to informing the taxpayer that the IRS has seized their state tax refund, also informs the taxpayer of their right to appeal the seizure in a collection due process (CDP) hearing.

Generally, under Internal Revenue Code § 6330(a), the IRS must provide a taxpayer with their right to a CDP hearing to protest levy action at least 30 days prior to the levy action.

However, Internal Revenue Code § 6330(f) states that in certain circumstances, the IRS does not need to provide a taxpayer with their right to a CDP hearing prior to the levy action, and one exception when the IRS levies a state tax refund.

In these “exceptional” cases, the IRS may send the taxpayer their notice of a right to a CDP hearing after the levy has taken place.

IRS Notice CP92 At a Glance

IRS Notice CP92 Explained, Part by Part

Here is a full explanation of the Notice CP92, part by part.

Part 1: Notice of Seizure of Your State Tax Refund and Your Right to a Hearing

The large letters at the top of the notice describe the two purposes this notice serves:

• To inform you that the IRS has seized your state tax refund
• To give you notice that you have the right to request a collection due process (CDP) hearing to protest the IRS’s seizure of your state tax refund

This section also informs you of the amount of your state tax refund that the IRS seized as well as your resulting balance with the IRS.

Part 2: What You Need to Do Now

In the next section, the IRS informs you “what you need to do now” — which is really what the IRS wants you to do now — and that is to pay what you owe immediately.

It probably comes as no surprise that most IRS collections notices are sent with this goal in mind.

The IRS also offers up the idea of entering into an installment agreement if you can’t afford to pay the full amount you owe in full.

Part 3: What the IRS Says They Will Do If They Don’t Hear From You

Next, the IRS tells you what will happen if you do not contact them to resolve your overdue taxes.

Although there are obviously other consequences of not dealing with your tax debt than those listed here, here are the three listed in this section:

1. Levy Action

The first consequence — that the IRS may garnish your income and levy your assets — should be fairly obvious since the IRS has already taken levy action against your state income tax refund.

2. Filing of a Notice of Federal Tax Lien

Once a tax debt is assessed, the IRS automatically has the legal right to your income and assets to satisfy your tax liability.

This is sometimes referred to as the IRS’s “secret lien.” It’s “secret” because only you and the IRS know about it — unless you tell somebody else about it.

However, the IRS has the power to let everybody else know about your tax debt.

It accomplishes this by filing a notice of federal tax lien (NFTL) in your country and/or state records.

Once that is done, your tax debt officially becomes public record.

Obviously, most people don’t go thumbing through public lien records — so it’s unlikely to affect your public reputation the way a bad social media post would — but interested parties may include, for example, organizations looking to lend you money.

Speaking of bad social media posts…have you seen the IRS Commissioner’s cat? Check out my YouTube video below to see what I mean.

3. Passport Revocation or Denial

If you owe enough in back taxes — the threshold is currently $62,000 — the IRS may prevent you from obtaining or renewing your passport.

It does this by “certifying” your tax debt to the United States Department of State — basically, telling the State Department that you owe a lot in taxes and therefore it should deny any passport applications you submit.

In certain cases, the State Department may even revoke your existing passport.

So if you are outside the United States — or are planning to travel outside the United States in the near future — it’s essential that you deal with your federal tax debt!

Part 4: If You Are in CNC Status Due to Hardship

If you are in currently not collectible (CNC) status due to hardship, you do not need to take further action in response to the CP92 Notice.

This is because while the IRS may seize your tax refunds while you are in CNC status, it may not take the other collection activities described in this notice — such as wage garnishments and bank levies — and it has likely already filed a Notice of Federal Tax Lien (NFTL) against you.

Part 5: Your Appeal Rights

Next, the IRS informs you of your rights to appeal their seizure of your state tax refund; this is arguably the most important section of your CP92 Notice.

In this section, the IRS gives you (brief) instructions about how to appeal the IRS’s levy action.

To do this, you must complete the Form 12153, Request for a collection due process or equivalent hearing.

You must submit this form to the IRS no later than the date indicated in this section.

If you fail to meet the deadline, you may still submit the Form 12153 — but you will not get a collection due process (CDP) hearing; you will get an equivalent hearing (as long as no longer than a year has passed).

Part 6: Your Billing Details

Next, the IRS provides you with a year-by-year summary of what they believe you owe  them.

Here is a quick legend on each of the column’s you’ll see for each tax year:

• Tax period ending: This is the last day of the tax period — typically a year but in some cases a quarter — for which you have a balance due.
• Form number: This is the type of tax form you filed (or for which the IRS filed a substitute for return) giving rise to the balance due.
• Amount you owed: This is the amount of underlying tax liability owed on the return when filed.
• Interest: This is the amount of interest the IRS has added to your initial balance.
• Failure-to-pay penalty: This is the amount of failure-to-pay penalty the IRS has added to your initial balance. Note that you may be liable to other or additional penalties than the failure-to-pay penalty, and if so, these penalties would each have their own column here.
• Total: This is the sum of the “amount you owed” as well as your accumulated interest and penalties.

Part 7: Additional Information

The next section of the CP92 Notice includes some additional information for you, such as:

• The official IRS webpage for the CP92 Notice
• Where you can obtains tax forms, instructions, and publications
• How to contact the IRS

Part 8: Taxpayer Rights and Sources of Assistance

In this section, the IRS provides you with some information about the Taxpayer Bill of Rights, IRS Publication 1, Low-Income Taxpayer Clinics (LITC), and the Taxpayer Advocate Service.

Part 9: Payment Coupon

At the bottom of the last page of the Notice CP92 is the payment coupon that you would submit with your payment if you intend to pay the amount on the notice in full or in part via paper mail.

When the IRS Sends Notice CP92

The IRS typically sends the Notice CP92 to a taxpayer when:

1. The taxpayer owes money to the IRS — or at least the IRS believes the taxpayer owes money to the IRS.
2. The IRS has sent other collections notices to the taxpayer — typically, at the very least, a CP14 Notice and a CP504 Notice (or their equivalents).
3. The taxpayer has filed a state income tax return indicating a refund.
4. The IRS has seized all or a portion of the refund shown on the taxpayer’s state income tax return.

What You Should Do If You Receive a CP92 Notice

Below are the steps you should take after you receive a CP92 Notice.

For more information about each of these steps, check out our article How to Fight the IRS and Win.

Step 1: Check the CP92 Notice for accuracy.

Don’t assume that the IRS did their math correctly — review the IRS’s numbers against your own.

Step 2: Correct any errors with the IRS.

If you do find an error in the IRS’s math, take it up with them.

You can always reach out to us at at 866-8000-TAX to go to bat against the IRS for you.

Step 3: Seek Penalty Abatement.

For most of our clients with penalties on their account, we at least seek some sort of penalty relief for them.

Sometimes the IRS grants it; sometimes they don’t.

But it’s generally at least worth a shot.

For more information about seeking abatement for the penalties on your account, check out this article.

Step 4: Pay the Balance Due OR Seek Tax Relief

Finally, you have to figure out what to do with the amount you owe the IRS after you’ve cleared up any disagreements with them concerning the amount as well as obtained any possible penalty relief for your account.

You can, of course, pay off your balance in full.  This will (obviously) stop future penalties and interest from accruing.

However, a better option — if you qualify for it — is an offer in compromise.  An offer in compromise is an agreement you make with the IRS in which the IRS agrees to accept a lower amount to satisfy your tax debt than you actually owe.

That said, not all taxpayers qualify for an offer in compromise, so there are other options, such as a temporary hardship placement called currently not collectible status as well as installment agreements for taxpayers who wish to pay their balance over time.

For an overview of how tax relief works, read our article What Is Tax Relief and How Does It Work?.

IRS Notice CP92 FAQs

Which states participate in the state income tax levy program?

The table below indicates which states participate in the state income tax levy program.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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