IRS Notice CP14 (Initial Tax Assessment and Balance Due Notice)
CP14 is one of the most common IRS notices. You don’t need to panic if you receive this notice. At this point, the IRS is not planning to take any serious collection actions. It’s just alerting you about your unpaid balance and your payment options. Generally, this is the first automated notice sent regarding IRS collection procedures and acknowledges a balance due to the IRS.
Here’s an overview of what to do and what to expect if you receive Notice CP14. To get help with back taxes, contact us at The W Tax Group today. We can talk with you about your options and help you deal with the IRS.
What to Do If You Agree with the Tax on CP14
If you agree with the amount due, you should contact the IRS and make arrangements to pay your back taxes. To stop penalties and interest, you need to pay the balance in full. Alternatively, you can apply to set up a payment plan or see if you qualify to settle for less than you owe through the offer-in-compromise program.
What to Do If You Disagree with the Tax on CP14
If you disagree with the amount due, call the IRS or contact a tax lawyer to help you. Typically, the notice has a phone number on the second page. Don’t ignore the notice if you don’t agree. If you don’t respond, the IRS will assume that you agree with the notice.
Why Do I Owe Money on CP14 When I Already Paid My Taxes?
If you paid your taxes in the last 21 days, the IRS may have sent out Notice CP14 before receiving your payment. Just disregard the notice in this situation. However, in some cases, you may receive this notice about penalties and interest if you made your payment late.
To illustrate, take a look at this sample CP14 notice. If you look at the billing summary, you will see that the taxpayer paid their entire tax owed, but then, they received several penalties and interest charges. In this case, the entire bill is penalties and interest.
Penalties and Interest on CP14 Notice
The IRS assesses late payment and failure-to-file penalties the very first day you miss a payment or filing deadline. Then, it reassesses these penalties monthly, until they reach their maximums. Interest accrues on all unpaid taxes until they are resolved. Here are the penalties you may see on Notice CP14.
- Failure-to-file penalty — This penalty is 5% of the tax, and it’s assessed monthly for up to five months. The IRS assesses it when you don’t file your return on time. If you file more than 60 days late, the minimum penalty is the lesser of $210 or 100% of your balance.
- Failure-to-pay penalty — This penalty is 0.5% of the balance. It’s assessed monthly until you pay your balance or it reaches 25% of your balance. This penalty can increase to 1% per month if the IRS issues a notice of intent to levy.
- Failure-to-pay estimated tax — If you don’t pay your taxes throughout the year, the IRS can assess the failure-to-pay estimated quarterly tax fee. Typically, this applies to business owners, self-employed people, and freelancers.
- Interest charges — The IRS applies interest to all unpaid balances. Interest rates change quarterly, and the notice should note the rate applied to your bill.
You can request to have the penalties removed by calling the IRS, writing to the IRS, or contacting a tax professional. The IRS often removes first-time penalties for people who have reasonable cause for filing or paying late, such as economic hardship, natural disasters, or loss of records. The IRS also removes penalties if they were incurred due to incorrect written advice you received from the IRS.
How to Pay Notice CP14
There are several different ways to take care of the balance on Notice CP14. Here are the main options:
- Pay in full online or through the mail.
- Set up an installment agreement to pay the taxes in monthly payments.
- Apply for an offer in compromise so that you can make a lump-sum payment and get out of the tax amount owed for less than you owe.
To talk about other options, contact us today. We are experienced tax attorneys with in-depth knowledge about IRS programs and options.
How to Find Your Current Account Balance
If you pay the balance by the due date, you shouldn’t incur any additional interest or penalties. The amount shown on your notice is the correct amount to pay. However, if you’re paying after the due date, your balance may incur additional interest and penalties.
To find your current balance, visit IRS.gov/balancedue. You may need to set up an online account to see your details.
What Happens If You Ignore IRS Notice CP14
If you ignore Notice CP14, the IRS will continue to try to collect the liability. Typically, the agency will send you Notices CP501, CP503, and CP504. These notices will also show how much tax you owe, plus the interest and penalties on your account. If you don’t respond to these notices, the IRS will assign your account to the collections department. Once your account is assigned to collections, the IRS may take the following actions:
- File a Federal Tax Lien against your assets.
- Garnish your wages.
- Seize the funds in your bank account.
- Levy personal or real property.
- Garnish your Social Security benefits or pension payments.
- Seize your retirement accounts.
The IRS has a lot of power to collect unpaid taxes. You don’t want to get to this point in the IRS collection process. You can avoid these collection actions by contacting the IRS as soon as possible after you receive CP14.
What to Do If You Can’t Afford the Tax Due on CP14
If you can’t afford to pay the balance shown on Notice CP14, you have several options. As noted above, you can apply for an offer in compromise. This is when the IRS lets you settle for less than you owe, but you have to pay off the entire settlement amount in 24 months or less.
You can also apply for currently-not-collectible status. If you qualify, the IRS will pause collection actions on your account. But if your financial situation changes in the future, you may have to pay the bill.
Get Help with Notice CP14
Received IRS Notice CP14? Looking for help with your unpaid taxes? Want assistance dealing with the IRS? Then, contact us now. At The W Tax Group, we can help you deal with the IRS.
Don’t let unpaid taxes cause you any more stress or worry. Get help from our experienced tax attorneys today.