CP77 Notice: The IRS Intends to Levy Your Alaska Permanent Fund Dividend

What a CP77 is

The IRS CP77 page says, “We intend to levy certain assets for unpaid taxes. You have the right to a Collection Due Process hearing.” A levy means the IRS takes property or money to pay a tax debt.

The IRS page does not say which assets. The Internal Revenue Manual (IRM), the IRS staff handbook, does. IRM 5.19.9.5.4 calls the CP77 the final notice for the Alaska Permanent Fund Dividend Levy Program. Under that program, as IRM 5.19.9.5.1 describes it, the IRS matches its list of people who owe federal tax against the State of Alaska’s list of people who applied for the yearly dividend.

IRM 5.19.9.5.2 says the IRS mails these notices in June and sends its levy file to the State of Alaska by August 31. The IRM says the state generally begins paying levy money to the IRS in October.

Your right to a hearing

The law requires this notice before a levy. IRC §6330(a)(1) bars the IRS from levying your property until it notifies you in writing of your right to a hearing. IRM 8.22.4.2.2 lists the CP77 among the notices that carry that right.

To use it, file Form 12153, Request for a Collection Due Process or Equivalent Hearing, by the date on your notice. The CP77 page says a hearing lets you appeal the intent to levy and raise other disagreements. IRC §6330(c)(2)(B) lets you challenge the tax itself there only if you did not receive a notice of deficiency for it or did not otherwise have a chance to dispute it. Our CDP hearing prep tool shows your request dates and the issues you may raise.

You get a CP77 only once for a tax period. IRM 5.19.9.5.2 says the IRS checks first for an earlier levy hearing notice on that period and sends a CP77 only if it finds none.

How to stop the levy

IRM 5.19.9.5.2 lists the ways people resolve these accounts before the levy: full payment, proof of payment, an installment agreement, an offer in compromise, a hearing request, or a finding that you cannot pay now (currently not collectible). The IRM says most of these take your account off the levy file.

The CP77 page points to the same options: pay what you owe, request a payment plan, or submit an offer in compromise. Our payment plan estimator shows which IRS plan likely fits what you owe. Tax professionals can compare every option in our collection alternatives router. If you want help, the CP77 page says Form 2848 lets someone such as an accountant contact the IRS for you.

IRM 5.19.9.5.3.1 also leaves some accounts out of the program. These include accounts with a pending or approved offer, a pending or approved installment agreement, an open bankruptcy, a pending innocent spouse claim, or a hearing request not yet with Appeals.

IRM 5.19.9.5.6 says you can answer a CP77 by letter or by calling the Automated Collection System number on the notice. Other IRS offices, and the Taxpayer Advocate Service, can also help resolve these cases.

What happens if you do nothing

The State of Alaska takes part or all of your dividend and sends it to the IRS. IRM 5.19.9.5.4.1 says the state’s Permanent Fund Dividend Division then mails you its own notice that the U.S. Treasury took part or all of your dividend. If you never saw the CP77 but have the state’s notice, IRM 5.19.9.5.6 tells IRS staff to ask you for the case number printed on it.

The CP77 page adds a second risk. A seriously delinquent tax debt can lead the State Department to deny or refuse to renew your passport under the FAST Act.

What people mistake a CP77 for

Many people mistake it for the IRS’s usual final levy notice, the LT11, Letter 1058 or CP90. IRM 8.22.4.2.2 lists the CP77 and the CP90 on the same line as hearing notices. The CP77 is the one the IRS sends for the Alaska dividend program.

Others think the hearing right covers only the dividend. The law generally gives one hearing notice per tax period: IRC §6330(a)(1) requires the notice only once for each taxable period. IRM 8.22.4.2.2 notes one exception: you can get another hearing if the IRS later assesses more tax, or certain penalties, for that period. If you skip this hearing, a later levy on other property for the same tax period may come without a new hearing offer.

Some people treat it as a bill they can pay later. It is a final notice. Treat the date on it as your deadline.

Common Questions