CP14 Notice From the IRS? What it Means & What to Do
Notice CP14 is the first letter you’ll receive from the IRS when you have a balance due for unpaid taxes. The IRS has announced in May of 2023 that they plan on sending out approximately 5 to 8 million CP14 notices from the end of May 2023 to the beginning of June 2023. This notice is generally the start of the IRS collections process and acting sooner rather than later to resolve the issue can save you a lot of money in penalties, interest and the other hassles that come up with enforced IRS collections.
The CP14 will contain basic information about your unpaid taxes, including:
- Tax year or period for which you owe.
- The amount of taxes, penalties, and interest you owe.
- Deadline for submitting payment.
You should respond by the deadline on the notice to avoid receiving more letters from the IRS or having your account sent to the IRS collections.
Why You Are Receiving a CP14 Notice
You’ll receive a CP14 notice when you didn’t pay your taxes in full for a given tax year. In other words, when you owe money to the IRS, this is one of the notices the IRS sends. For example, you may have filed a tax return that had a balance due, but failed to submit payment in full. Once the IRS processes your tax return, they will send the CP14 notice asking for payment.
View this example CP14 notice to see what the notice looks like and the information it contains. You can also find more information on this notice by visiting irs.gov/cp14.
If you have tried to set up an installment agreement, you may receive IRS Notice CP14IA. This new IRS notice replaces the traditional CP14 notice in certain situations.
What to Do When You Receive a CP14 Notice
Review the notice carefully and decide whether you agree with the amount due. If you agree, you’ll need to determine which payment option works best for your situation.
Pay in Full
If you can afford to pay in full, you’ll minimize the penalties and interest the IRS will charge you. You’ll also avoid having your balance sent to collections.
To pay online, visit the IRS website. You can pay directly from your bank account without being charged any payment fees. You can also pay by debit or credit card for a fee.
To pay by mail using a check or money order, follow the instructions on the notice and include your Social Security Number, the tax year you owe, and the form number (i.e., 1040) on your payment.
Pay by Installment Agreement
If you need a little more time to pay off your tax debt, you can request a short-term payment plan of up to 120 days. If you need more time to pay, you can request a long-term installment agreement.
IRS installment agreements require you to make monthly payments until you pay off your balance. There are several installment agreements, including streamlined agreements, direct debit installment plans, and partial pay installment agreements.
Many taxpayers can apply for an installment agreement online using the IRS online payment agreement tool. You can also call the phone number on your CP14 notice to request one.
Penalties and interest will continue to accrue while you are on an IRS installment agreement. Your future tax refunds will also be taken and applied to your balance until you pay it in full.
Your Options If You Can’t Afford to Pay Your Balance
The IRS offers many options when you can't pay your taxes in full. The simplest way is through an installment agreement. If you can’t make the minimum monthly payment on an IRS installment agreement, you may be able to negotiate a lower monthly payment amount. You may also be able to receive a temporary collection hold (known as currently not collectible status), which doesn’t require you to make any monthly payments.
You can also submit an Offer in Compromise if you want to try to settle your taxes for less than what you owe. These options generally require you to submit detailed financial information to the IRS, and you may want to consult a tax professional for assistance.
What to Expect If You Don’t Respond to the CP14 Notice
You’ll receive several more notices if you don’t respond to the CP14 by the deadline. The following notice is the CP501, followed by the CP503 and CP504.
Each notice contains similar information. Penalties and interest you owe will continue to increase with each notice. If you don’t respond to any of these notices, the IRS will send your account to the IRS collections department.
IRS collections can then take several steps to try to collect on a tax debt, such as:
- Filing a Notice of Federal Tax Lien to create a public record of the IRS lien against your property.
- Establishing a wage garnishment that seizes a portion of your paychecks until the IRS has collected your entire balance due.
- A bank levy that takes money directly out of your bank account to pay your taxes.
- A levy of your Social Security benefits.
You can avoid these collection actions by paying in full or using any of the alternative options discussed above.
Penalties from the CP14 Notice
The CP14 Notice should include a breakdown of the taxes, penalties, and interest you’ve been charged. There are several types of penalties that you may face if you don’t pay your tax bill on time.
The failure to pay penalty is the most common penalty. This penalty is charged at 0.5% of your unpaid balance each month that you fail to pay it in full.
The failure to file penalty is charged when you don’t file a tax return on time. This penalty is assessed at 5% of your unpaid balance each month until your return is filed.
The estimated tax penalty is charged when you failed to make quarterly estimated tax payments during the year. Estimated tax payments are required for self-employed taxpayers and those that don’t have enough tax withholdings taken out of their income.
In some cases, you can request that some penalties be removed from your account using first-time penalty abatement or penalty abatement for reasonable cause.
What to Do If You’ve Already Paid Your Balance
It takes the IRS some time to process your payment. If you’ve paid in the last 21 days prior to the date on your CP14 notice, you can disregard the notice. Your account information should be updated shortly and you shouldn’t receive any more bills for that tax period.
What to Do If You’ve Already Set Up a Payment Plan
IRS notices are sent by an automated system there may be delays whenever you submit new information. If you’ve recently set up a payment plan for the taxes mentioned in the CP14 notice, you should continue to follow the terms of your payment plan by sending monthly payments.
If you have an IRS payment plan and receive a CP14 notice for a new tax amount owed that’s not already included in your payment plan, you’ll need to make a revision to your installment agreement to include the new taxes owed. You may be able to do this online or by calling the phone number on your CP14 notice. Respond quickly to your CP14 notice to resolve your tax problems before they become worse. Contact an EA, CPA, or tax attorney to find out what the best options are for your situation.
Help with CP14 Notice & TaxCure
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