The CP14 Notice is one of the most commonly misunderstood tax documents. This blog post will go in-depth on what a CP14 Notice is, why you should care about it, and how to avoid them in the future.
What is a CP14 Notice
If you’ve gotten the CP14 IRS notification, you’re undoubtedly wondering what to do. The good news is that there’s still a lot you can do before it becomes an issue that affects your finances or credit.
However, you most likely do owe the IRS unpaid taxes if an IRS notice CP14 has been delivered to your home.
Let’s look at what this form implies and what choices you have, and you’ll understand why acting promptly is in your best interests.
Why Did I Get a CP14 Form From the IRS?
The IRS CP14 Balance Due notice advises taxpayers that they have a tax debt.
The IRS sends this letter to taxpayers who have underpaid their taxes. The most prevalent reason for receiving this Notice is that the taxpayer filed a tax return without paying the full amount of taxes owed.
If this is the case, you may have misread what you owed. You could also be guilty of deliberately failing to pay your balance because you can’t afford to pay taxes right now.
The following factors can also cause CP14 letters:
- Because the IRS is imposing a fine on you for failing to submit your taxes by the filing deadline, you owe a balance.
- You didn’t pay enough taxes throughout the year, based on your income.
- You missed four quarterly tax payments in April, June, September, and January.
The IRS may forgive your penalty if you have never received one before. The IRS is typically quite lenient if you ask for a penalty abatement on your first offense.
However, the IRS is not forgiving when it comes to late payments of quarterly taxes. When creating a larger debt relief plan with a tax attorney, some taxpayers are able to negotiate their penalty being waived.
Interest on unpaid taxes
If you don’t pay your tax debt in full by the deadline on the Notice, interest begins to accrue on any remaining unpaid amount.
Action on penalties and interest is generally suspended if you apply for a relief option while you’re adhering to the conditions of your relief plan.
Could an IRS Notice CP14 Be a Mistake?
In most situations, you’ll know why the IRS has added a balance to your account.
Due to human error or a lack of cash, it’s quite typical to miss tax payments. If you only owe a fine, the overall sum may be low.
Do you believe the IRS has made a mistake and that you paid all of your outstanding taxes in full before the deadline? Before sending the IRS any payments, double-check your tax return and payment records.
It’s unusual, but it’s conceivable that the IRS made a mistake. Also, don’t forget to double-check your deductions and credits.
In certain circumstances, you may be able to lower your tax burden by submitting an amended return. This might potentially reduce the amount you owe in taxes after accounting for any credits or deductions you qualify for.
What to Do After Receiving a CP14 Letter
Don’t ignore the IRS CP14 letter just because you believe the IRS made a mistake. Even if it’s an error, the IRS will consider your debt to be active until you fix it!
Once you’ve verified that the IRS’s debt determination is correct, you have a few choices.
Here’s a look at how taxpayers should handle C14 letters:
- Pay Your Balance in Full: If you can, making full payment on your debt by the due date on your letter is the most effective method to avoid being discovered by the IRS.
- Request an Extension: The IRS is occasionally prepared to grant taxpayers who owe balances more time to settle their accounts. In certain situations, you may be granted up to 120 days to come up with the money necessary to get your balance down to zero. This is referred to as a Temporary Suspension of Collection Procedure.
- Ask for Tax Relief: If you don’t have enough money to pay your taxes, the IRS may allow you to use a tax relief plan.
IRS debt relief
The most frequent sort of IRS debt relief is an Installment Agreement (IA). Using an installment agreement, you may pay off your entire balance in six years (three years plus three years) using one payment at the end.
The IRS may allow you to enter into an Offer in Compromise (OIC) or Currently Non Collectible (CNC) status if you can show financial hardship.
Keep in mind that both relief options entail a lengthy application process, during which you must show proof of your inability to pay your tax debt by providing financial information and documents.
Why You Shouldn’t Ignore a CP14 Letter
If you’re experiencing your first IRS encounter, it’s natural to feel scared.
We want you to know that having an IRS tax balance does not have to develop into a devastating problem if you handle it promptly.
The IRS is generally more than ready to collaborate with taxpayers who have outstanding balances. This is precisely why the IRS offers such a large number of relief options under its Fresh Start initiative.
If you can’t pay your entire balance, there’s no sense in attempting to hide from the IRS. If you do that, the consequences will get much worse. If you don’t reply to the CP14 letter by the deadline, the IRS will utilize liens, levies, and other penalties on your account.
Unfortunately, the IRS will try to seize your earnings, bank accounts, and assets in order to recoup what you owe on your tax balance.
This problem might follow you for years, even if your tax balance wasn’t that large. If the IRS decides to seize your pay, you have no option but to do so.
Nonpayment penalties that are applied to your account can end up costing you far more than the amount you owed in taxes, which is why it’s crucial for individuals who owe tax money to settle their accounts as soon as possible.
Need help with Your CP14 Notice
A tax specialist is on hand if you’ve received the CP14 letter. They can verify your liability and, with the IRS’s Direct Pay portal, you may be able to make payments as soon as possible.
If you have any questions about a CP14 notice you’ve received from the IRS, give us a call right away.