The CP14 notice is one of the IRS’s most common notices, and if you owe back taxes, you are very likely to receive this notice or one like the CP501. Generally, the CP14 doesn’t come through certified mail. Instead, it comes through the regular mail right to your post box. However, that doesn’t mean that this letter isn’t important.
If you ignore this notice, the IRS will add interest and penalties to your account. And eventually, the agency will start sending more serious notices that lead to collection actions such as wage garnishments and asset seizures. To get help now, contact us at Wiggam Law today to schedule a consultation and see how we can help you.
In the meantime, here’s everything you need to know if you receive this notice.
What is IRS Notice CP14?
The CP14 is a balance-due notice from the IRS. It shows you how much tax you owe as well as interest and penalties. It also outlines how to rectify the tax debt and what happens if you don’t pay.
Generally, the CP14 is one of the first notices the IRS sends when you owe back taxes. If you have owed taxes for a while and this is your first bill, you may have been lulled into a false sense of security that the IRS won’t try to collect the debt, but that’s simply not the case.
The IRS often lets accounts sit dormant for a few months or even a few years before attempting to collect on your tax debt — this was particularly pervasive from 2020 to 2022 as the agency slowed down collections during the COVID pandemic and its aftermath. But once you receive this notice, you will start to receive others. After the first notice goes out, they typically come in every six weeks or so.
What to Do if You Receive CP14
Review the notice carefully and make sure you agree with the amount due. If you weren’t aware that you owed a tax debt and are unsure why you’re receiving the bill, consider setting up an online account on the IRS’s website. Then, you can look at transcripts of old tax returns and see if the IRS made any adjustments you weren’t aware of.
What if You Disagree With the CP14
If you disagree with the info on your CP14 notice, contact the IRS right away. You can call the number on the notice or hire a tax attorney to deal with the agency on your behalf.
The exact steps you need to take vary based on why you disagree with the notice. If you disagree with the tax due, you may need to 1) appeal the assessment, 2) amend your tax return, or 3) request a refund after paying under protest. In contrast, if you disagree with the fees and interest associated with an assessed penalty, you may need to contact the IRS and ask for penalty abatement.
What to Do if You Agree With the Notice
If you agree with the notice and have the funds, you should pay in full as quickly as possible to avoid any additional interest or penalties. However, you should also apply for penalty abatement.
Generally, the IRS will provide penalty abatement if you had reasonable cause for getting behind — this is reserved for severe situations such as deaths, grave illnesses, or natural disasters. The agency will also waive penalties for first-time offenses. As long as you haven’t incurred penalties in the last three filing periods, you will usually be eligible.
You can apply for penalty abatement before or after paying your bill. If you want to save as much as possible, you should pay the bill immediately and then apply to have the penalties refunded to you. The IRS will send you a check if it approves your request.
Can’t Afford to Pay in Full?
If you can’t afford to pay in full, you should contact the IRS to make payment arrangements. A tax professional can help you find the best resolution for your situation, but here is an overview of the most popular options:
- Installment Agreement (IA) — An IA lets you make monthly payments on your tax bill. If you owe less than $50,000, it’s straightforward to set up, but that doesn’t mean it’s the best option — unfortunately, close to half of taxpayers with an IA default on these arrangements. To get guidance about the best resolution option for your budget, you may want to consult with an experienced tax attorney.
- Offer in Compromise (OIC) — An OIC lets you settle your debt for less than you owe. You can pay the settlement in a lump sum or in monthly payments for up to 24 months. This program has a paperwork-intensive application, and the IRS rejects about half of the applicants. To improve your chances, you may want to work with a tax professional.
- Partial Payment Installment Agreement (PPIA) — With a PPIA, you make monthly payments, but when your tax debt expires (generally about ten years after the due date), the IRS writes off the remaining balance. This settlement option saves you money compared to a traditional payment plan, giving you longer to pay than an Offer in Compromise. The drawback, however, is that the IRS will review your situation every two years and may require payment in full if your finances improve significantly.
- Currently Not Collectible (CNC) — The IRS knows that the juice isn’t always worth the squeeze, and if you prove that you truly cannot afford to pay, the agency will mark your account as Currently Not Collectible. Note that the word “currently” means this isn’t a permanent status. The IRS will review your account occasionally to see if anything has changed and may take you out of CNC status and proceed with collection action if your financial situation improves.
- Innocent Spouse Relief — Although a majority of taxpayers don’t qualify for this program, it’s worth mentioning because it can offer substantial savings for eligible taxpayers. This program is for people who filed a joint return but ended up owing a significant tax bill due to their spouse, ex-spouse, or late spouse’s actions. Typically, you must not have known about the actions or had reason to know. However, there are exceptions to this rule, such as when a spouse is coerced into signing a return.
You can apply for any of these programs on your own. The links above provide detailed instructions about the application process. If you’re unsure what program is right for you or how to get started, you can contact a tax attorney to get help choosing the right path and submitting the paperwork.
How Much are the Interest and Penalties?
The CP14 will note a payment deadline, and if you don’t respond by that date, additional interest will be added to your account. However, by the time you receive this notice, you probably already have interest and penalties on your account.
To see how much they are, look at the bottom of your notice. Depending on the length of the notice, this may be on page three. There, you will see a breakdown of the interest and penalties applied to your account.
For instance, if the IRS has assessed a late payment penalty, the notice will note how many months it has been since your payment was due. Then, it will state the unpaid balance, the penalty rate, and the penalty amount. This penalty is usually 0.5% per month, but it can increase to 1% after a certain period of delinquency.
To illustrate, say if you are 12 months late, the penalty is 6% of your balance, and you owe $2,000. Then, the penalty will be $120. All other penalties and interest will be broken out in the same way.
How to Learn More
The CP14 notice comes with many stock details about payment plans and penalty calculations. If you want even more information, you can check out IRS.gov/cp14. This short URL should be printed on the top of the notice, and it directs to an IRS website about this notice. You can also call a tax attorney if you want more information.
Get Help With Unpaid Taxes
Dealing with unpaid taxes can be very stressful. You never know if the IRS is going to escalate collection actions, so you constantly have the threat of wage garnishments, bank account seizures, and other financially damaging actions hanging over your head. Luckily, before they proceed with these actions, the IRS must send you another notice and give you 30 days to respond.
However, that’s not the case with every collection action. The agency can file tax liens and seize your tax refunds without sending you anything other than the CP14 or a similar balance-due notice.
To protect your financial situation and livelihood, you must deal with your unpaid taxes. At Wiggam Law, we know that dealing with unpaid taxes on your own can be overwhelming, but it’s much easier with the right help. To get assistance dealing with the IRS, contact the experienced tax attorneys at Wiggam Law today by calling us at (404) 233-9800 or filling out our online form to schedule a consultation today.