Moving Won’t Make Your IRS Debt Disappear

Relocating to another state does not give you relief from IRS tax debt – the IRS is a federal agency with nationwide enforcement powers, and they can take involuntary collection actions against you regardless of where you're at in the country. In fact, even most states have processes that allow tax liens and garnishments to follow you to your new location if you move. 

The biggest risk with the IRS is that you may miss notices if you don't update your address, and then, you may end up facing a bank levy or wage garnishment with little or no warning. If you owe tax debt to the IRS, be aware that they will find you and collect that debt. In most cases, it's better to let them know where you are than to hide. 

Key takeaways

• Moving does not eliminate your IRS tax debt. 
• The IRS can collect the tax debt, regardless of where you live in the United States.
• Although the IRs must contact you, they don't have to track you down.
• Sending a notice to your last known address meets the legal contact requirement in most cases – even if you don't receive the notice. 
• Not updating your address can lead to unexpected collection actions, tax assessments, or audits with no advance warning. 

IRS Debt Follows You — Even If Your Mail Doesn’t

Once your tax debt is established, the IRS has 10 years to collect it – the agency starts with trying to convince you to pay the debt voluntarily by sending you notices and applying penalties. However, if you don't comply, the agency can start involuntary collections – that's where they take your wages, bank account balances, and other assets without your permission. 

Before doing so, however, the IRS must send you a notice. The law says that the agency must: 

• Send the notice to your last known address by certified or registered mail,
• Leave the notice at your usual place of business, or
• Hand you the notice

In most cases, the agency uses option one. They send the notice to your last known address, and even if the notice is returned to the IRS, they have still met their legal requirement. Legally, you've been notified even if you don't receive the letter. 

IRS Must Send a Notice — But You Must Update Your Address

By law, the IRS must send you a notice before taking several actions, including:

• Levying your assets – Typically, they send a Final Notice of Intent to Levy, such as LT11, CP90, or LT1058.
• Assessing tax – They send a Notice of Deficiency that gives you 90 days to respond, or they assess the tax against you.
• Auditing your return – They send an Initial Audit notice, followed by audit results and often a deficiency notice.

In all cases, the IRS meets its legal requirements by sending the letter to your last known address, and if you don't receive the notice (even if it gets returned to the agency as undeliverable), they can move forward with seizing your assets, assessing the tax, or auditing your return. And you lose the chance to appeal before the action takes place.

What happens if the IRS can't reach you?

If the IRS meets its legal requirements to contact you, the timer starts ticking. For example, if the notice says you have 30 days to request a collection due process hearing, you have 30 days whether or not you actually received the notice. 

Within the 30-day period, the Tax Court has jurisdiction over your case – generally, that means that you can appeal with a collection due process hearing, and if you don't agree with the results, you can appeal in Tax Court.

However, once the 30-day window elapses, you may still have some limited appeal rights, but you're no longer in the Tax Court's jurisdiction. Depending on the situation, you may be able to request an equivalent hearing (available for up to one year after the notice that advised you of your right to a CDP hearing), but if you disagree with the results of the equivalent hearing, you cannot appeal in Tax Court. You may also be able to pay and then request a refund. 

Which address does the IRS use?

Several Tax Court cases have focused on which address the IRS should use when there are legal requirements to contact taxpayers before taking a certain action. The courts have said that the IRS is required to use the address it believes the taxpayer wishes to be used, and the IRS must use a different address once it learns that the taxpayer has changed their address. 

Court opinions have stated that the IRS must "exercise reasonable care and diligence" in ascertaining and mailing the notice of deficiency to the correct address. Furthermore, courts have established that the IRS should not wear blinders and deprive taxpayers of their only opportunity for a prepayment hearing to litigate their case. 

What does that mean? It means that if you sent in a change of address form and the IRS continued to use your old address, the court will probably side with you in a case where you didn't receive the notice. However, in cases where the IRS used the last address from your return and you never provided a new address, the court will typically side with the IRS. 

That said, you really don't want to be in a situation where you're making this type of argument. To be on the safe side, you should proactively update your address with the agency.

Consequences of Missing Time-Sensitive IRS Notices 

There are at least 20 different notices that the IRS sends to a taxpayer's last known address, and many of them include strict deadlines that can hurt taxpayers if they miss them. Here's an overview of some of the biggest time-sensitive IRS notices with their deadlines and the consequences of not responding.

Consequences of Missing Time-Sensitive IRS Notices
IRS notice	Deadline	Consequences of not responding
Notice of deficiency	90 days (150 if out of the country)	IRS will assess the tax. You will miss the chance to appeal (unless you pay first and then ask for a refund)
Final intent to levy	30 days	The IRS will levy your assets. You will lose the right to a CDP hearing and pre-enforcement judicial review
Determination of innocent spouse relief	90 days	The IRS's decision will become final. You will not be able to request a judicial review (unless you pay and then ask for a refund).

Can the IRS rely on the address on the return being audited?

No, the IRS should not necessarily use the address shown on the return being audited. Rather, the agency should use the address on the taxpayer's last filed return, unless the taxpayer has advised the IRS to use a different address.

How do you alert the IRS about a new address?

To let the IRS know that you have a new address, file Form 8822 (Change of Address). Changing your address with the USPS – for example, filling out a change of address form or a moving packet – may update your address with the IRS, but not always. To be on the safe side, contact the IRS directly. 

Can the IRS use an address from my W-2?

The IRS generally does not use the address on your W-2 to send correspondence. The agency, instead, uses the address on your last filed tax return.

Missing an IRS Notice – What Happens?

Here's a quick example of what can happen if you move and don't update your address when you owe IRS tax debt. Let's say you file a tax return with a home address in Florida, and it shows that you owe $10,000. A few months later, you move to Connecticut. You don't pay your taxes, and you don't update your address with the IRS.

The IRS sends several demands for payments. Eventually, the agency sends a Final Notice of Intent to Levy with your Right to a Hearing. You don't take any action (because you weren't aware of the notice), and 30 days later, you realize that the funds in your bank account are frozen due to an IRS bank levy.

The bank must hold the funds for 21 days so that you can establish that the levy was done in error. You appeal based on the fact that the IRS didn't contact you. The IRS counters with the fact that they sent the notice to your last known address. Appeals agree that the IRS met its statutory notice requirement. The 21-day period ends, and the bank sends the funds to the IRS. 

At this point, you can still request an equivalent hearing, but it's extremely unlikely that you will be able to get your money back. And if the bank levy didn't cover the full tax liability, it's very likely that the IRS will move forward with an additional levy (wage garnishment, asset seizure, etc) to collect the remaining debt.

Can State Tax Debt Follow Me?

Yes, if you owe money to a state revenue agency, and they issue a tax lien (called a warrant in many states), the lien can follow you. Any property titled in your name in any county in the country is subject to seizure. Most states must also notify you before seizing your assets or garnishing your wages, but again, that requirement is typically met if the state sends a notice to your last known address. 

Additional state enforcement actions may include: 

• Seizing IRS refunds to cover state tax debt, 
• Referring your debt to a private collection agency – collection agencies often have departments devoted to finding people
• Suspending or revoking state-issued driving, business, or professional licenses. 

What to Do If You’ve Moved and Owe Back Taxes

Bottom line – how do you avoid missing critical IRS notices and facing unexpected collection actions? By notifying the agency when you move. Send the IRS Form 8822 as soon as you move, or update your address through your online IRS account. 

You can also set up an online account to see which notices the agency has sent you. Consider doing that as soon as possible if you have recently moved and worry that you've missed something. 

To get help dealing with the IRS, use TaxCure to find an experienced tax pro today. TaxCure's directory of tax professionals is set up so that you can search for a pro who has dedicated experience with your concern, whether you're facing a levy, need help setting up payments, want to appeal or audit, or need help with another tax problem. Don't wait – get relief and solutions now.