Getting mail from the Internal Revenue Service can be nerve-wracking, especially if you receive a notice without knowing what it’s about. Have you received a CP14 notice? Wondering what it means? If you receive a CP14 notice in the mail, that means you have an outstanding tax balance with the IRS.
The IRS usually sends this notice if you’ve filed your tax return but haven’t paid the full balance. A CP14 notice contains a demand for payment, but it’s not a notice of levy or any other serious collection actions. At this point, you still have time to make arrangements for your tax debt so you don’t need to panic.
That said, it’s still a serious notice, and to avoid further issues, you should take action as soon as you can. Not responding to this notice can lead to serious consequences, including penalties and collection enforcement actions such as garnishments or seizures of property.
Once you understand what this notice means, you can take steps to address your outstanding tax bill and avoid future complications. To talk about this notice now, contact us today at Damien’s Law.
What Is an IRS CP14 Notice?
The CP14 notice is a letter the IRS sends you to let you know that you owe taxes. Its main purpose is to remind you of the amount you owe, including any penalties and interest that have been added, and to nudge you to take action and settle your tax debt.
Why Did I Get a CP14 Notice?
You might be wondering why you received this notice in the first place. There are a few common reasons for getting a CP14 notice:
- Underpayment or non-payment of taxes: If you didn’t pay the full amount of taxes you owed after filing your tax return, the IRS will send you a CP14 notice to let you know about the remaining balance.
- Errors or discrepancies in your tax return: Mistakes or inconsistencies in your tax return can lead to a CP14 notice. If there’s a mistake on your return, the IRS will send you a notification before adjusting your tax bill, and you will have the opportunity to dispute the changes. However, if you moved or missed the other notices, it’s possible that the CP14 notice may be the first one that you see.
- Failure to respond to previous IRS notices: If you’ve received notices from the IRS before and haven’t responded or taken action, they might send you a CP14 notice as a reminder that you still owe money.
The CP14 notice means that your tax bill is on the IRS’s radar. Often, the agency doesn’t send out notices until months or even a year or more after you file a return without paying. Because of that, some people think that the IRS may never notice their unpaid taxes.
However, that is not the case. Eventually, the IRS catches up on its backlog, and it starts sending notices to taxpayers. The agency stopped sending out many notices during the COVID pandemic, and it took years to catch up.
As of May 2023, the agency is planning to send out millions of these notices. Once you receive a CP14 notice, you are on the IRS’s radar, and you are likely to receive increasingly serious notices every six weeks or so.
What If I Already Made Payment Arrangements?
If you have an installment agreement (monthly payment plan) already in place, the IRS will send you Notice CP14A. This notice simply shows you how much you currently owe, and the IRS usually sends it once a year while you make payments on your tax bill.
If you receive CP14 (instead of CP14A) and you already have an installment plan, you may have set up the installment plan after the IRS sent the notice, or the IRS may have sent the wrong notice in error. Double-check that your payment plan is still active, and if so, don’t worry.
If you cannot find your payment plan on your online account or if the IRS is no longer taking payments out of your account, contact the agency directly to talk about the situation.
What Are the Parts of a CP14 Notice From the IRS?
You may be curious about what you’ll find in the CP14 notice. It’s important to go through it carefully and understand the details. Here’s what you can expect to see:
- Notice number: A unique ID number the IRS assigns to the notice for their reference.
- Tax period: The specific tax year or period that the notice is referring to.
- Amount owed: The notice will tell you the total balance due, including the original tax amount, penalties, and any interest that has been added.
- Payment options: The IRS will provide information on how you can pay the amount owed. They might mention online payment options, sending a check, or even setting up an installment agreement.
- Due date: This is the deadline by which you need to pay the amount owed or take action to address your tax debt.
Taking the time to review the CP14 notice carefully is incredibly important. You want to make sure that all the information is correct and that you understand what you need to do to resolve your tax debt. Ignoring or brushing off the notice can lead to penalties and collection actions, and it may even affect your credit score.
What Can Happen if You Ignore a CP14 Notice?
You should never ignore a CP14 notice – not responding can lead to serious consequences such as added penalties, tax liens, bank account seizures, wage garnishments, and more.
The consequences of ignoring a CP14 notice include:
- Increased penalties and interest: By ignoring the notice, you’re not addressing your tax debt. This means that penalties and interest will continue to accumulate over time, making your overall tax bill even higher.
- Wage garnishment and bank levies: Ignoring a CP14 notice may lead the IRS to take more aggressive action to collect the money you owe. They can place a levy on your bank accounts or even garnish your wages.
- Liens against your property: The IRS can make it impossible for you to sell or transfer property, such as a home or a car, by placing a lien until your tax obligation is paid.
- Blocked refunds: The IRS can withhold your future tax refunds and apply the amount toward your unpaid debt.
Ignoring a CP14 Notice is not a good strategy. Generally, receiving a CP14 notice is the start of the IRS collection process and is likely followed by a series of notices (CP501, CP503, CP504) that get more threatening until the IRS places a tax levy. You should take it seriously and address your tax debt promptly to avoid the potential consequences. By taking proactive steps to resolve the issue, you can mitigate the negative impact on your finances and maintain good standing with the IRS.
What to Do When You Get a CP14 Notice
When you get a CP14 notice, you should read it carefully and make sure you understand what it’s telling you that you need to do. After you’ve read the notice and before you respond, take the time to double-check your tax records, payment history, and any other documentation for the tax year that’s in question. Take note if there’s any discrepancy between your information and the IRS’ information. Then double-check your calculations to ensure your amount owed matches up with the IRS’ number.
When you disagree with the CP14
If you believe that the notice is in error, follow the directions in the notice to request a review or appeal of your documentation. Depending on the exact situation and the reason you disagree with the amount due, there are several different steps that you can take. They include appealing an assessment, paying the tax under protest and requesting a refund, filing for an offer in compromise based on doubtful liability, or applying for innocent spouse relief.
When you agree with the CP14
If it appears that you owe the IRS money, you have a few options:
- Pay the full amount owed
- Request an installment agreement to make monthly payments
- Request penalty relief (you’ll need to explain why you’re requesting relief and provide documentation of your situation)
- Consider an offer in compromise
- Explain that you can’t afford to pay and get currently-not-collectible status
Whichever option you choose, it’s important to act right away and not leave it until later. It’s in your best interest to resolve the situation with the IRS as soon as you can. Consult with a tax professional to find the best solution for your situation.
How to Avoid Getting a Future CP14 Notice
Whether you’ve already received one or not, you can avoid receiving this notice in the future by doing the following:
- Pay your taxes or arrange to pay them: If possible, pay in full, but don’t ever leave a balance hanging with the IRS without having a plan for it. The IRS will work with you to develop a payment arrangement if you can’t pay the entire tax bill.
- Report all of your income: Make sure you report every income source when filing your tax return. By reporting everything, you’ll avoid discrepancies that could trigger the IRS to adjust your return and increase your balance due.
- Keep your records organized: It’s super important to keep all your tax-related documents organized and in one place. This includes things like W-2 forms, 1099 forms, and income and expense records. Staying organized makes it easier for you to file your taxes accurately and avoid mistakes. It also helps you respond if you receive a CP14 or any other notice in error.
- Double-check your numbers: Take your time and review your tax return carefully before submitting it. Check that all the numbers are accurate, including your income, deductions, and credits. Small mistakes can lead to underestimating your tax burden, and underreporting is a red flag for the IRS.
What’s the Difference Between a CP14 and an Audit?
While both notices might look scary to the average taxpayer, a CP14 notice and an audit aren’t the same. The main difference is that a CP14 notice is about the money you owe, while an audit is a comprehensive examination of your tax return. The CP14 notice is focused on resolving your outstanding tax debt, but an audit is about verifying the accuracy of your tax filing and catching potential fraud.
A CP14 notice does not mean that you’ll get audited. The CP14 Notice is much more common than an audit, and nearly everyone who owes money to the IRS will receive one. In contrast, an audit is less common, and it only occurs if the IRS randomly selects you or has specific concerns about your tax return.
Take Action Fast When You Get a CP14 Notice
Don’t wait on a CP14 notice – it’s important to act right away. Follow the notice’s instructions to make a payment, set up an installment agreement, or request penalty relief, and do it right away. You can act with confidence when you get the help of a tax professional who can guide you through the process of responding to a CP14 notice.
If you’ve received notice CP14, you owe money to the IRS, and we can help you set up a payment plan, apply for penalty relief, or make other arrangements that work better with your situation. If you disagree with the notice, we can also help you figure out the best steps to take.
At Damiens Law, we never push one-size-fits-all plans on our clients. Instead, we work with them to develop resolutions that work for their unique situation. Dealing with the IRS is stressful, but if you ignore the notices, the situation will get worse. Let us help you. To learn more, contact us for a free consultation today.