Letter 2257C means “Balance Due Total to Taxpayer”. This letters 2257C are responses to your oral or written request for a pay-off amount for any balance due you have to the IRS. The total amount reflected in your letter is how much the IRS is seeking so that you can close out your tax debt with them and move on with your life. When you know how much you owe, you should pay the amount indicated by the date provided in the IRS letter 2257C.

If you cannot make this payment you should call your tax representative or even the IRS directly to make other arrangements to pay. Please take this final step if you do not have the money to pay off your tax debt in full, because there are several options that are available to you depending on your exact circumstances.

WHAT TO DO AFTER RECEIVING THE NOTICE

  • While some IRS letters are for informational purposes only, some letters are instructional and require immediate response. When you get this notice, the first thing you need to do is to read the notice carefully and understand what the IRS is telling you. This letter is easy to understand but you can still consult your tax representative to be entirely sure.
  • Check the time frame the IRS has given you to respond. The deadline will be indicated on the letter sent to you by the IRS. It is important to get back to them before the due date so you don’t give the IRS the chance to perform collection actions on your taxes (tax liens, levy etc.). You may also be subject to pay extra interests and penalties.
  • Check the IRS website for more information on Letter 2257C. You will find the IRS explanation of the letter there as well as frequently asked questions by taxpayers.
  • If you wish to contact the IRS directly concerning the letter 2257C they sent you, there is a phone number on top of the first page, usually at the top right corner of the letter. When you contact them and you have provided your Taxpayer Identification Number, they will explain and provide enough information on your tax issue that will allow you make a good decision on how to proceed with the letter.

Now, you have understood the letter sent and you know you have to pay the amount you owe to the IRS. Here are some tips taxpayers should know if they owe the IRS money:

  • Offer in Compromise
  • IRS Fresh Start Programs
  • Installment Agreements
  • Current Compliance
  • Reduction of Penalties and Interests
  • Extension to pay taxes owed

Offer in Compromise – The IRS offers flexible terms with its Offer in Compromise (OIC) program. An OIC is an agreement between a taxpayer and the IRS that settles a taxpayer’s tax debt for less than the full amount owed. This is only accepted when the IRS evaluates the financial situation of the taxpayer and come to the conclusion that he or she cannot pay the full tax debt through a huge sum or monthly payment agreements. Taxpayers are advised to present the IRS with all the information they need to include them in the OIC program. The IRS reasons with taxpayers that are struggling with tax debts in the United States.

Extension to Pay – This is a request for an additional time to pay the amount owed to the IRS. The time given to taxpayers may be short or long, it depends on the circumstances of the taxpayer involved. You can request additional amount of time to pay by calling the IRS using the phone number on the letter 2257C. Generally, you don’t need to pay to request for a short extension time. If you don’t feel comfortable talking to the IRS, you can always tell your tax representative to talk to the IRS on your behalf.

Installment Agreement – Taxpayers can request for an installment agreement with the Internal Revenue Service (IRS) if they cannot pay the total tax they owe at once. This is an agreement made between the taxpayer and the IRS to pay the amount due in monthly installment payments. For this to be possible, you must have filed all required tax returns and be current with your estimated tax payments and withholding taxes as well. If the IRS approves of the installment agreement, a one-time fee will be charged by the IRS. This fee varies depending on the agreement made. When the payment is deducted directly from your bank account, the user fee is between $52 and $105. For some taxpayers with lower incomes than normal, the fee can be reduced.

IRS Fresh Start Program – The Internal Revenue Service (IRS) has a program to help taxpayers that are struggling to get a fresh start. Through the fresh start program, struggling taxpayers and small businesses may be able to pay the taxes they owe without facing additional and unnecessary burdens, such as tax liens, bank levies and wage garnishments by the IRS. Taxpayers can check for fresh start agreements on the IRS official website.

Current Compliance – Taxpayers who owe the IRS should be aware that negotiating with the agency cannot commence until they are deemed in “current compliance” with their federal tax obligations. This means you must first file all required returns (even if you owe) and be current with estimated tax payments or withholding. Before the IRS can consider a tax settlement or a payment plan, the agency will demand that these prerequisites are met. Meeting this requirement will establish “goodwill” with the IRS and help to facilitate a favorable outcome of your tax dispute.

Reduction of Penalties and Interest – Taxpayers facing large tax liabilities often see their debts increase significantly due to added penalties and interest. The IRS often applies various penalties and interest to unpaid taxes making it more difficult for taxpayers to pay their federal tax debt. These penalties are mandated by the U.S. Tax Code and are most commonly assessed against taxpayers for non-payment or underpayment of taxes, failure to timely file a tax return, and failure to make payroll tax deposits (for businesses). In addition to interest that accrues on any unpaid tax, interest is also charged on the penalties themselves. It is always best to ask the IRS to remove all penalties and interest to help reduce your overall balance. This is why taxpayers should know different penalty and interest removals so the amount they are supposed to pay stops accumulating.