IRS Letter 1058: Your Rights and How to Protect Yourself When the IRS Threatens to Seize Wages and Bank Accounts

Receiving a notice from the Internal Revenue Service (IRS) can be an intimidating experience for any taxpayer. Among the various communications the IRS sends, Letter 1058, officially titled “Final Notice of Intent to Levy and Your Right to a Hearing,” stands out as one of the most critical. This letter serves as a final warning that the IRS is preparing to seize your property to satisfy an unpaid tax. Understanding the legal implications of this notice and the actions you can take is paramount to protecting your assets and resolving your tax issues.  

The Legal Foundation of IRS Letter 1058 

Letter 1058 is not merely a suggestion; it is a legally mandated step in the IRS collection process, rooted in the Internal Revenue Code (IRC). Specifically, IRC Section 6331 grants the IRS the authority to levy, which includes the power of distraint and seizure by any means, on the property and rights to property of a taxpayer who neglects or refuses to pay their tax liability within 10 days after notice and demand. This broad authority allows the IRS to collect overdue taxes by seizing income and/or assets such as wages, independent contractor income, bank accounts, retirement accounts, social security benefits, business assets, and even personal property like your home or car. However, this power is not without limitations. To ensure fairness and provide taxpayers with an opportunity to be heard, Congress enacted IRC Section 6330, which establishes the requirement for a final notice and the right to a Collection Due Process (CDP) hearing before a levy can occur. Letter 1058 is the embodiment of this requirement, serving as the final pre-levy notice that triggers these important taxpayer rights. 

Your Right to a Collection Due Process Hearing 

The most critical aspect of receiving Letter 1058 is the notification of your right to request a Collection Due Process (CDP) hearing. IRC Section 6330 stipulates that no levy may be made on any property unless the IRS has notified the taxpayer in writing of their right to a hearing. This notice must be sent at least 30 days before the first levy action, giving you a 30-day window from the date of the letter to file a request for a CDP hearing using Form 12153, “Request for a Collection Due Process or Equivalent Hearing.” The hearing is conducted by an impartial officer from the IRS Independent Office of Appeals who has had no prior involvement with the unpaid tax liability in question. During the hearing, you can raise any relevant issue related to the unpaid tax or the proposed levy, including appropriate spousal defenses, challenges to the appropriateness of the collection action, and offers of collection alternatives such as an installment agreement, currently not collectible or an offer in compromise. You may also challenge the existence or amount of the underlying tax liability itself, but only if you did not receive a statutory notice of deficiency or did not otherwise have a prior opportunity to dispute it. 

Deconstructing the Contents of Letter 1058 

To ensure taxpayers are fully informed, IRC Section 6330(a)(3) mandates that Letter 1058 must include specific information in simple and nontechnical terms. The notice will clearly state the amount of the unpaid tax and inform you of your right to request a hearing within the 30-day period. It will also describe the proposed levy action and your rights with respect to that action. This includes an explanation of the legal provisions and procedures related to the levy and sale of property, the administrative appeals available to you, and the various alternatives that could prevent the levy, such as entering into an installment agreement under IRC Section 6159. Furthermore, the letter will outline the procedures for redeeming your property if it is seized and for obtaining a release of the federal tax lien. In compliance with the Fixing America’s Surface Transportation (FAST) Act, the notice also includes information regarding the potential for the State Department to deny, revoke, or limit your passport if you have a seriously delinquent unpaid tax. 

The Consequences of Inaction 

Ignoring Letter 1058 can have severe and far-reaching consequences. If you do not respond within the 30-day period by either paying the tax due or requesting a CDP hearing, the IRS is legally authorized to proceed with the levy. This can result in the garnishment of your wages, the seizure of funds from your bank accounts, and the confiscation of your personal and business assets. In addition to the levy, the IRS may file a Notice of Federal Tax Lien, a public document that alerts your creditors that the government has a legal right to your property, which can severely damage your ability to obtain financing and credit. The potential revocation or denial of your passport can also create significant personal and professional disruptions. It is crucial to understand that the suspension of collection actions is only guaranteed if you request a CDP hearing in a timely manner. Once a hearing is requested, the IRC suspends the statute of limitations on collection and prohibits the IRS from levying for the same tax and period while the hearing and any subsequent appeals are pending. 

Your Path Forward After Receiving Letter 1058 

Upon receiving Letter 1058, you have several options. The most direct approach is to pay the tax liability in full, which will halt the collection process and prevent the accrual of further interest and penalties. If you cannot pay the full amount immediately, you can pay what you can and explore other collection alternatives. However, the most powerful tool at your disposal is the right to a CDP hearing. By filing Form 12153 within the 30-day deadline, you not only get the opportunity to present your case to an independent appeals officer but also trigger an automatic pause on collection actions, giving you valuable time to negotiate a resolution without the immediate threat of a levy. This makes a timely and well-prepared CDP hearing request an essential strategy for any taxpayer facing a final notice of intent to levy. The other option is to file an Equivalent Hearing (EH) that has some similarities and differences to a CDP hearing. 

Hopefully this material has provided you with a clear understanding of IRS Letter 1058. If you found this information helpful, please like this post and subscribe to our channel for more valuable content. For a more in-depth discussion, scan the QR code below or click the button to watch our free video for more in depth coverage of how to deal with the IRS and put your tax problems behind you. 

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Dealing with the IRS can be complex and stressful. If you have received a Letter 1058 or are facing other tax issues, you don’t have to navigate it alone. We invite you to book a consultation when you are ready to get started. We can help you understand your options and develop a strategy to resolve your tax problems effectively.