IRS CP14 Notice: What It Means and How to Respond
No one looks forward to getting mail from the IRS, especially now that refund checks are usually deposited electronically. However, if you owe taxes, you will receive numerous collection notices, and they often strike a scary and confusing tone.
When you receive Notice CP14, the IRS is letting you know that you owe them money. While this isn’t the most urgent IRS notice you can receive, it is important to take it seriously, check out your payment options, and decide how you want to proceed. To talk with a tax attorney now, contact us at McLaud Law P.C. today.
An Overview of CP14
Notice CP14 is an initial notice of unpaid taxes. The IRS sends this out to inform you of what you owe, including the starting tax debt, penalties, and interest. The notice also lays out what your next steps should be and what happens if you do not address the tax debt.
This IRS notice breaks down everything you need to know. The upper right corner notes your Social Security number, allowing you to verify that you’re the person they are trying to reach. The billing summary part of the notice shows what you owe in taxes, each type of penalty, and interest. It also gives you a due date—paying the tax debt in full by that date will prevent further collection efforts.
The notice also includes what you should do after receiving CP14, the payment options that may be available to you, and what additional costs will be added to the bill if you do not pay in full.
What to Do After Receiving a CP14
You should start by reading the CP14 in full. It’s a detailed notice that includes all of the information you need to come up with a plan. Look at the amount due — does it match what you believe you owe? Are the penalties and interest in line with how long the debt has been accumulating?
What you do next depends on whether you agree with their assessment and whether you are able to pay.
If You Disagree With the Assessment
Perhaps you already paid what you owed, or maybe you don’t think you ever owed what they’re claiming—either way, it’s important to handle this promptly to avoid excess penalties and interest. Notice CP14 includes a phone number that will connect you to an IRS representative.
You can reach out to them to discuss your file and why you think the notice was sent in error. If you are uncertain about reaching out to the IRS on your own (a reasonable concern), you may want to discuss your options with a tax attorney first.
If You Can Pay
If you agree with the amount listed on your CP14 and you are able to pay in full, do so at your earliest convenience. Interest compounds daily on IRS tax debt, and penalties are charged for every month or partial month that the debt remains unpaid.
The sooner you pay off the tax debt, the less you will have to pay in penalties and interest. Paying electronically provides instant confirmation. However, you can also pay via check or money order through the mail. You can even make payments in person at an IRS office.
If You Can’t Pay
You agree with the amount you owe, but you are not able to pay in full, what happens now? You still have options, but it’s important to explore and compare them earlier rather than later. The IRS isn’t generally looking to bankrupt taxpayers who have simply fallen behind financially and are struggling to get caught up.
If you are willing to make arrangements, they may be willing to work with you. The type of payment plan that works best for you depends on how much you owe and your ability to pay.
Payment Options After Notice CP14
There are multiple payment options to check out if paying in full isn’t a viable option for you. They include:
Installment agreements
The IRS offers both long-term and short-term payment plans. Short-term plans must be paid off within 180 days, while long-term plans last as long as 72 months and even longer in select cases. If you sign up for direct debit payments, you can decrease your fees and save money on penalties. You must be able to make the minimum monthly payment comfortably to be approved for an installment agreement.
Partial payment installment agreements
If you are unable to afford the minimum monthly payment for an installment agreement but you can still commit some money to a payment plan every month, a partial payment installment agreement, or PPIA, may suit your needs. This is offered to taxpayers who cannot pay in full, either upfront or monthly, due to their income and assets.
Since this program is based on your ability to pay, the IRS requires extensive documentation. You are required to make monthly payments until the Collection Statute Expiration Date passes. However, if the IRS checks in on your financial situation before that and it has improved significantly, you may still have to pay the entire amount back.
Offer in compromise
Like the PPIA, the offer in compromise program is based on your income and assets. If the IRS accepts your offer, they acknowledge that you are unable to pay what you owe in full. You make a reasonable offer based on your ability to pay, and if they accept it, you pay that amount either in full or in several monthly payments.
This process can be quite long, as the IRS may take months or longer to process your application and decide whether or not to accept it. You have to provide extensive detail on your financial situation to be considered for an offer in compromise, so you may find it helpful to work with a tax lawyer to prepare your offer. It is not as simple as proposing a number and negotiating.
Currently not collectible
Your financial situation may not allow you to make any payments toward your tax debt. If you find yourself in this position, look into currently not collectible status. If the IRS finds that you cannot pay, they will consider you currently not collectible. From time to time, they will then review your financial situation to find out if they can resume collection activities.
What Happens If You Ignore CP14?
Ignoring notices from the IRS is never in your best interest. Once the due date on the CP14 notice passes, the IRS may follow up with CP501, CP503, and CP504. Each of these informs you of what you owe, your payment options, and the consequences of failing to respond.
The final one is an official notice of intent to levy. If that notice also goes ignored, the IRS may place a lien on all of your personal property or levy your assets. It is far more stressful and time-consuming to address an active lien or levy than it is to take action now and propose a payment plan that works for you.
Frequently Asked Questions
When does the IRS send Notice CP14?
The IRS sends out Notice CP14 when taxpayers have not yet paid their taxes. This may be because they did not file a tax return and the IRS filed a Substitute for Return on their behalf, or it may be because they didn’t pay what was shown on their return.
I didn’t file a tax return — why did I receive Notice CP14?
If a taxpayer owes money and does not file a return, the IRS will file a Substitute for Return on their behalf. They do this because of 1099s or W-2s that were sent to them. However, the Substitute for Return doesn’t account for any deductions or credits you may be owed.
What should I do if I received a CP14 because the IRS filed a Substitute for Return?
You should file your own tax return so you can take advantage of any credits, deductions, or exemptions you qualify for. While you may still owe taxes, it’s likely that you’ll owe less than the IRS originally calculated.
How do I verify that the amount listed is accurate?
You can access your tax records and transcripts via your Individual Online Account at the IRS website. This shows how much you owe, when taxes and penalties were assessed, and other important information about your taxes.
I can’t pay in full — what are my payment options?
Depending on how much you earn and how much you own in assets, you may be able to look into installment agreements, partial payment installment agreements, currently not collectible status, or an offer in compromise.
Is there a way to get rid of penalties and interest?
You may be able to remove penalties via reasonable cause penalty abatement or first-time penalty abatement. If you’re approved, the IRS will remove the penalties from your account and any interest accrued by those penalties. However, they cannot remove rightfully accrued interest—you will owe that until you pay in full.
I already paid the taxes listed on CP14 — can I ignore it?
You may have paid the taxes between the time they sent the notice and the time you received it; however, you should still never ignore communications from the IRS. Check whether or not your payment was received and whether or not they still show that you owe a balance. You can get this information by contacting the IRS directly or checking your tax transcripts on your account.
I can’t pay in full — can I ignore CP14 until I can?
No. Even if you are unable to pay in full, you should communicate with the IRS. Without any response from you, they may simply assume that you have no intention of paying. This is what often leads to aggressive collection actions, including asset levies, liens, and wage garnishment. You can work with the IRS to come up with a payment plan that is realistic for your financial situation.
When to Talk to an Attorney
At this stage of the IRS collection process, you have choices. Perhaps you are able to fully pay the tax you owe, or already have and just need the IRS to recognize that. In that case, you may want to tackle your tax problem on your own. However, if you are assembling a financial statement to make a resolution proposal, you may be better off with professional assistance.
This is especially true if you have years of missed tax returns, complex tax situations, or massive tax debt. Whenever you find yourself in over your head, dodging contact with the IRS, or losing sleep over unpaid taxes, it’s time to talk to a tax attorney.
If you’ve received IRS Notice CP14, don’t panic. You are early in the IRS collection process, and that means you have plenty of options that you can use to get your tax debt under control. Let the team at McLaud Law P.C. help. Call us at 585-397-7785 or request a free consultation online.
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