The Internal Revenue Service (IRS) is currently sending 5-8 million CP14 notices to taxpayers. Earlier in the year they announced that they would be sending these notices. They have gone out between the end of May and the beginning of June. Tax notices often cause taxpayers to panic but if you have received one, take a deep breath. You have a few options if you cannot meet the demands of the notice. Let's take a look at what the CP14 notice is and how you should respond if you cannot make a payment.
What is a CP14 Notice?
A CP14 Notice is a Notice of Balance Due and Demand for Payment. This is the first letter that the IRS sends out when you have a balance for unpaid taxes. The IRS sends this notice out when the balance is $5 or more and there is no math error.
The notice lets you know the tax amount due, including penalties and interest. It also makes a request for payment within 21 days. The notice also lets you know how to pay. The updated CP14 has a QR code that will take you online to make set up an IRS.gov account and make a payment.
If you'd prefer, you can make a payment using a voucher by mail using a check or money order. Taxpayers can also make payments online by using their bank account or a debit or credit card.
What should I do if I get a CP14 Notice?
Read your notice CP14 in its entirety. If you agree with the tax owed pay the balance in full by the requested date. If you do not agree with the balance due, penalties, or interest you should contact the IRS. Some notices will go out even though you have already made a payment. This is because the notices are computer generated.
If you feel this is the case in your situation you can verify the IRS received your payment by checking your tax account transcript. You will need to create an account online but then you will be able to access your account in 3 easy steps.
If you disagree with the amount on the notice you should also pull your tax transcripts. This will allow you to see any changes that the IRS may have made to the account. It will also explain the different penalties, if any that are now on the account. Common penalties are the failure to file and failure to pay penalties. You may be eligible to have these penalties abated. Check out the Tax Relief with Timalyn Bowens podcast episodes on penalty abatement to see if yours qualify.
What if I cannot pay the balance?
You want to be in control of your financial situation and control your cash flow. If the balance is under $10,000 and you can pay it within 36 months you may qualify for a Guaranteed Installment Agreement.
If your balance is $50,000 or less and you can pay it off within 72 months you may qualify for a Streamlined Installment agreement. If neither of these work you may also qualify for to have a temporary hold placed on your account. The IRS refers to this as the account being currently not collectible.
A licensed tax professional can also set up one of these arrangements for you. Sometimes the tasks can be daunting and you may feel more comfortable letting a professional handle it. Find a tax professional that has experience in this area and can communicate with you what is going on.
Summary
If you have received a CP14 notice do not panic. If at all possible pay the balance in full by the requested payment date. If you cannot pay the balance reach out to the IRS and set up an arrangement by the requested payment date. If the thought of that seems overwhelming hire a tax professional to help you. Whatever you do, get the help you need because back taxes shouldn't ruin your life.
Timalyn S. Bowens EA is America's Favorite EA and Tax Expert who will work hard to find a customized legal solution for you! As an Enrolled Agent licensed through the Internal Revenue Service Timalyn is able to fight the IRS for taxpayers in all 50 states. As the host of Tax Relief with Timalyn Bowens and a YouTube content creator she empowers taxpayers to make educated decisions about their tax situation.
When you are facing questions regarding your personal or business taxes, working with a professional makes all the difference. At Bowens Tax Solutions, we serve our Louisville-area neighbors by providing the tax services and knowledge needed to succeed. We are here to assist you with your tax issues and preventative care. Visit our website at www.bowenstaxsolutions.com for more information..