What are IRS CP14 notices and what happens if I do not respond?

Receiving a letter from the IRS is never a pleasant experience and the same applies for the IRS CP14 notice.

The CP14 notice indicates a balance due that is due with the federal government which, simply put, means you have a tax debt.

Should you be worried to receive CP14 notice?

Not at all, this is far from an indictment as simple mistakes and miscalculations are the most probable reasons for the tax debt. The following steps can be followed to alleviate the stress from any pending tax debts.

What does the CP14 notice say?

It is important to note that while a CP14 isn’t the last warning, you’d be better off clearing any outstanding tabs you may have incurred.

A CP14 notice usually carriers the date your tax debt was assessed, the exact amount due, and the due date for you to cover said amount.

What do you do after receiving CP14 notice?

Your best course of action would be to work with the IRS in order to pay off the debt as soon as possible. If you ignore the IRS Notice CP14 or wait too long, the IRS will begin applying pressure on your account by raising your debt with monthly penalties.

This can negatively impact you in many ways such as facing future bank levies. The IRS may even resort to increasingly invasive collection efforts in order to secure the amount you owe.

If you feel that the IRS made a mistake, and if you can prove (or wish to prove) that you do not owe additional taxes, you can also speak with a tax professional who might be able to guide you on how you can proceed with your case.

What will the IRS do?

After sending a CP14 notice, the IRS will wait for a response from you. If you ignore the IRS Notice CP14 or wait too long, the IRS can start applying pressure on your account by raising your debt with monthly penalties.

The monthly penalty for failing to pay your owed taxes by the due date is 0.5 percent, and up to a cumulative 25 percent after fifty months. If you’re late by even a few days, you will still be liable for that first 0.5 percent.

Your tax debt will also start to incur interest. The interest rate for a debt with the IRS can vary depending on the quarterly rate change, which can be reviewed via the IRS’s newsroom.

What happens if you cannot pay?

If your tax debt becomes unmanageable then you might find yourself in a difficult position. However, there are ways to negotiate for a reduced debt with the IRS.

This would involve working with a tax professional to write up an offer in compromise. This involves formulating a payment plan that is drafted by the indebted taxpayer to the IRS.

The plan outlines what the individual is financially capable of paying monthly until the tax debt reaches its statute of limitations (10 years after the tax assessment date, plus tolling periods).

Alternatively, you also use an IRS pre-qualifying tool to see if you might be eligible. Following this process does not guarantee that the IRS will accept your offer. Your tax debt will continue to grow while the IRS deliberates your offer.

Finally, if you require immediate reprieve from the IRS’s collection efforts, you can also consider filing as currently not collectible. This form of recourse halts the IRS from levying any penalties against you until your financial situation improves.