IRS tax letter: Millions may get payment-due notice this month
The IRS will send millions of letters this month to taxpayers it believes have underpaid the tax agency. It’s important to pay attention to this letter — called a CP14 — because ignoring it could lead to penalties, according to Jackson Hewitt chief tax information officer Mark Steber. Steber stated that the IRS sends approximately 9 million of these letters each year. The letter is unusual because the agency has stopped sending many types notices and letters due the pandemic. The IRS in February announced it would halt sending more than 10 types of letters that cover issues such as failure to file a tax return to under-withholding taxes.
The IRS sends a CP14 if it calculates that a taxpayer has a balance of more than $5 on their account, which can be related to a number of issues, such as failing to report some income or failure to pay a balance in full. The CP14 will tell you how much you owe and request payment within 21 days, according to the Taxpayer Advocate Service, which notes that the letter is one of the most common notices sent to taxpayers.
“The CP14 is a balance of taxes due notice, and that is why they aren’t suspended,” Steber said. It is in the taxpayer’s best interest to know they owe money to ensure that penalties and interest don’t increase. “
The IRS is required to send CP14 notices within 60 days after the tax agency assesses a tax liability, which means people who filed their taxes leading up to the mid-April tax deadline could get the letters in June.
What happens if I don’t pay?
First, if you pay the full amount by the due date printed on the CP14, the IRS says it won’t charge you any interest. After that, interest on your balance will begin to accrue.
Steber recommends that taxpayers carefully read the letter and take steps to address the outstanding balance to avoid additional costs and hassle.
The IRS charges 0.5% per month on unpaid taxes, up to a maximum of 25% of the total balance due, which can add up. However, if you don’t pay the amount due within 60 days, the IRS can move to collect on the balance and even place a lien on your property, such your home or your car. Steber stated that the IRS is skilled at many things and is particularly good at getting their money.
What should I do if my income is not enough?
The IRS promises to work with taxpayers in order to create a payment plan. This can be done by the IRS via an online form ..
The IRS says taxpayers dealing with financial hardship can also ask for a temporary delay of collection until they get back on their feet (See the IRS’ website for more information on applying for a delay. )
What if I think the CP14 letter is wrong?
Contact the IRS if you believe the notice is incorrect. Steber stated that you should be prepared to document your case.
The CP14 letter will provide a number for you to contact the IRS, but he noted that the agency has been difficult to reach on the phone. You can also send the IRS a letter with your documentation.
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