Katherine M. Johnson, CPA, CTRS• Georgetown, KY & Serving All 50 States
    Mon–Thu 9:00 AM – 4:00 PM ET
    Next Level Tax Resolution Logo

    Katherine M. Johnson, CPA, CTRS

    I owe both the IRS and Kentucky. Which one do I deal with first?

    The right order is not the bigger balance and it is not the louder letter — it is whichever deadline closes the cheapest route first.

    Call (800) 236-3741

    The right order is not the bigger balance and it is not the louder letter — it is whichever deadline closes the cheapest route first.

    Owing two agencies at once feels like twice the problem, and it usually is not. Most of the work overlaps: the same financial picture, the same returns, largely the same conversation. What does not overlap is the deadlines, and that is the whole of the sequencing question. You are not behind because you have not decided yet. You are behind if you decide by which envelope looks angriest.

    If you have letters from both in front of you: (800) 236-3741, answered around the clock.

    Key takeaways

    • 1Sort by deadline, not by balance. A date that closes your cheapest route outranks a larger number that can wait a fortnight.
    • 2Kentucky's sixty-day protest window is usually the closest fixed deadline, and it is the one people miss because the letter is quiet.
    • 3The same sixty days is when Kentucky's 25 percent cost-of-collection fee can be added — so on the Kentucky side, one date carries two consequences.
    • 4Resolving one agency does not resolve the other. They do not share assessments, agreements, or outcomes.
    • 5Kentucky takes its own tax out of your state refund before anything else — including before other agencies' claims.

    The short answer

    Deal with whichever fixed deadline closes first, and in practice that is usually Kentucky. A Kentucky Notice of Tax Due gives sixty days from its printed date to protest in writing, and after that the assessment is final with no further hearing. The federal side has more intervention points and later ones. Balances do not decide the order; calendars do.

    Why the instinct is wrong

    Two instincts arrive with people, and both are reasonable and both are wrong.

    “Deal with the bigger one first.”

    Size tells you how much work a matter will take. It does not tell you when it stops being fixable. A $4,000 Kentucky assessment inside its protest window is more urgent than a $60,000 federal balance that has generated one reminder notice, because the Kentucky window closes permanently and the federal one has not started.

    “Deal with the scarier one first.”

    The IRS writes more letters, in firmer language, more often. Kentucky's Notice of Tax Due is a quiet document. The tone of a letter reflects the drafting conventions of the agency that wrote it, not the speed at which your options are disappearing.

    The rule, and why it is a rule rather than an opinion

    Rank every open matter by the date on which your cheapest route disappears. Not the date something becomes impossible — very little in tax is truly impossible — but the date after which the same argument costs you money, a right, or both.

    Some of those dates are hard. The ninety days to file a Tax Court petition after a federal Notice of Deficiency is the hardest on the list: the IRS says plainly that working with it during those ninety days will not extend the time to file, and there is no equivalent route afterwards. Kentucky's sixty-day protest window is the next: the assessment becomes due and payable if not protested in writing inside it, and the levy power that follows is expressly conditioned on that review having been forgone or exhausted.

    Others shut a door and leave a narrower one open, and being precise about how much narrower is the whole point.

    Missing the thirty days to request a federal collection due process hearing is serious. An equivalent hearing can be requested within one year — but it carries no right of judicial review, so you cannot take the outcome to the Tax Court, and it does not suspend collection the way a timely request does. That is a worse room, not an escape.

    Missing a Kentucky protest is the same shape. The argument about the amount survives only for someone who pays the assessment first and then claims a refund under KRS 134.580 within four years, appealing a denial. For a reader who can find the money that is a genuine second chance. For a reader who cannot, it is no chance at all — which is exactly why the sixty days is worth more than it looks.

    So the ordering rule is: the deadlines that end things before the deadlines that only shrink things, and among those, earliest first. That produces a sequence you can defend rather than a hunch. It is a way of ranking published dates, not a principle of law, and the exceptions further down this page are real.

    Where the two calendars usually land

    In the ordinary case — a Kentucky assessment and a federal balance arriving in the same season — the sequence comes out like this.

    1

    Any Kentucky notice inside sixty days of its printed date.

    It is usually the closest of these dates, it is quiet enough to be missed, and the same date is when the department says a 25 percent cost-of-collection fee may be added. One date, two consequences.

    2

    Any federal notice carrying a stated statutory period.

    A Notice of Deficiency and its ninety days to file a petition. A Final Notice of Intent to Levy and its thirty days from the date on the letter to request a hearing before Appeals — and because that thirty days is the one that carries judicial review with it, it belongs near the top of the pile rather than in the there is a backstop category. Both are dated from the notice, not from receipt.

    3

    Whichever side is closest to enforcement.

    Kentucky's statutory notice before a levy is at least ten days, in person or by certified mail; the federal notice of intent to levy is thirty. If both agencies are at the enforcement stage, the state one moves on a shorter fuse.

    4

    Everything else — and here the balances finally matter.

    Payment agreements, offers, penalty relief. This is where most of the money is and almost none of the urgency.

    The one place the two systems touch

    They are separate agencies and they do not coordinate, with one exception worth knowing about because it decides where your refund goes.

    Kentucky withholds a state income tax refund from a taxpayer who is indebted to a state agency — but the statute directs that the balance is transmitted onward only “after satisfaction of any undisputed delinquent tax liability due the Department of Revenue.” The Department of Revenue takes its own tax first, off the top.

    There is a detail in the neighboring section that tells you something about how the two claims are treated. Where the money is going to another agency, the debtor gets written notice and may request a hearing within thirty days, and no funds move until appeal rights are exhausted. That thirty-day notice belongs to the other agency's debt. The Department of Revenue's own tax liability is satisfied first and carries no equivalent step.

    I am not going to characterize that as unfair, because that is not a call I am qualified to make and it is not what this page is for. I state it because it explains something people find baffling — that a state refund can vanish into a state tax balance with no separate warning — and because knowing it changes whether you count on that refund.

    What I can't promise you

    Which agency will act first on your account

    Both work from internal criteria neither publishes, and anyone who tells you they know your file's position in a queue is guessing. The sequencing rule on this page is built on published deadlines, which is the only part of this that is knowable in advance.

    That the order is right for your case

    There are real exceptions. An active federal levy on a business bank account outranks everything, whatever the calendar says. A Kentucky license matter with a certified letter already sent outranks a protest window on a small balance. The rule is a default, and defaults are for situations nobody has looked at yet.

    A fee number before I have seen the accounts

    I am not going to tell you that dealing with both at once is twice the fee. It is usually not, because most of the underlying work is shared. But I cannot quote you a number for either side before I have seen the accounts, and a number given before that is a guess.

    What to do next

    1

    Put every letter from both agencies in one pile, in date order.

    Not two piles. The whole point is that the calendars interleave.

    2

    Mark three dates in a different color.

    Kentucky: sixty days from the date on any Notice of Tax Due. Federal: ninety days on a Notice of Deficiency, thirty days on a Final Notice of Intent to Levy — both counted from the date printed on the letter, not from the day it arrived. Those three are the ones where late is a different situation, not a slower one.

    3

    Do the earliest of those dates first, even if it is the smaller number.

    This is the whole rule and it is the step people skip.

    4

    Get transcripts on both sides before you negotiate anything.

    Federal transcripts you can request yourself. The harder part is reading them — the codes are not written for taxpayers, and the sequence of what happened is rarely what people remember happening.

    5

    Do not enter a Kentucky online payment agreement while a protest is still live in your head.

    Its terms state that protest rights under KRS 131.110 are extinguished. If you may want to argue the amount, argue it first.

    Download: Kentucky vs IRS — the two-column deadline sheet

    Every response window on both sides, on one page, with the statute beside each one and the date we last checked it. Built for exactly this problem: two agencies, one calendar.

    First name and email. That is a fair exchange for a sheet we maintain, and it is how the revised version reaches you when a deadline on either side changes. Unsubscribe in one click; a download does not become a phone call.

    Frequently asked

    If you are holding both

    I am a CPA and a Certified Tax Resolution Specialist, and I practice from an office in Georgetown, Kentucky.

    Bring everything, in whatever order it is in. Putting two agencies' letters onto one calendar takes about twenty minutes and it is the part that changes what happens next.

    If it turns out one side is already handled and the other is a form you can file yourself, I will tell you that.

    Dealing with both is usually not two fees. The transcripts, the financial picture and the filing history are shared work, which is why doing them together tends to cost less than doing them a year apart. What the first conversation costs is something you will know before it starts.

    A real line, staffed in office hours and covered by an automated assistant overnight.

    Katherine M. Johnson, CPA, CTRS

    Katherine M. Johnson, CPA, CTRS

    Katherine M. Johnson is a licensed CPA with over 30 years of experience and a Certified Tax Resolution Specialist (CTRS). She personally handles every case — representing individuals and businesses before the IRS and state revenue departments nationwide.

    More on Kentucky: how Kentucky collection differs from the IRS · the Kentucky section index. Federal notices are indexed separately: the blog. Kentucky state matters: state tax resolution.

    This article is general information about Kentucky and federal tax law, not tax advice for your situation. What order is right for your account depends on facts specific to it.

    Next Level Tax Resolution is not affiliated with, endorsed by, or acting on behalf of the Internal Revenue Service, the Kentucky Department of Revenue, or any other government agency. No outcome is promised or implied; what any program or provision means for you depends on your own account.

    Katherine M. Johnson, CPA, CTRS

    Published: October 2026 · Last reviewed: August 2026