Have you received a CP14 “balance due” notice from the IRS? If so, you’re one of the millions of Americans who has received this letter in the past few months.
The Internal Revenue Service has begun sending millions of CP14 “balance due” letters indicating that taxpayers owe at least $5 on their accounts. Responding to this letter appropriately is essential to avoiding penalties.
Read on to learn more about CP14 “balance due” letters and how you should respond.
“Notice CP14” is an IRS letter indicating that you owe at least $5 in taxes. The letter states:
You may have received this letter if you filed a tax return and did not pay the entire tax balance. Alternatively, if you owe any tax penalties to the IRS, you may receive a letter reminding you of your balance.
Typically, these letters request that taxpayers pay their remaining balances within 21 days. Legally, the IRS must send them within 60 days after assessing your tax liability. Many taxpayers begin receiving these letters in June or July for the previous tax year.
Here are the steps you should follow after receiving a CP14 Notice:
First, you should verify who sent the letter. If the letter came from the IRS, it will include instructions about how to respond. However, if it came from a state or local tax agency, you may need to call that agency for further instructions.
Next, you should review the letter closely and determine how much you owe. You may disagree with the balance due because you believe you paid your entire tax balance when you filed your return.
If you agree with the balance due, you can pay the bill through the IRS website, over the phone, or by mail. The penalty for not paying this balance is 0.5% for every month you fail to pay, with a maximum penalty of 25% of the balance due.
While paying the balance due is the easiest option upon receipt of a “balance due” letter, you also have a few other options.
If you disagree with the IRS letter, you can appeal the balance due by calling the IRS and speaking with a representative. Be sure to have your tax documentation with you, including any canceled checks or amended returns, to review during your call.
If you cannot pay your tax bill within 21 days, you can request an extension with the IRS. The IRS offers free extensions of up to 180 days through its short-term payment agreements.
If you won’t be able to pay the balance in full within 180 days, you can work with the IRS to begin a payment plan. A payment plan could allow you to pay your tax debt in monthly installments without fees. Your monthly payment amount would depend on your financial status and payment plan.
If you are in financial hardship and cannot pay the balance through a payment plan, you can consider other tax assistance programs, such as an offer in compromise. An offer in compromise could allow you to settle your tax debt for less than you owe.
At Levy & Associations, we’d be happy to help you navigate a CP14 “balance due” letter.
Contact us today at 800-TAX-LEVY for assistance.
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