An IRS notice CP14 shows that you owe money to the IRS. This for one of two reasons; you either missed a payment, or interest and penalties accumulated on the outstanding amount. Of course, it is reasonable that you are terrified by this letter. However, it is significant that you know it is within your right to dispute what the IRS is claiming. At times, their system can make errors and miscalculate your original tax return. Thus, your first step upon opening the notice CP14 is to review the letter with meticulousness.
Reason for IRS CP14 Payment
The basis that the IRS claims you owe money is due to your tax return. Either you did not pay within the given time limit, or you did not claim the correct amount owed. If you did happen to pay, you will have to supply evidence of payment. Therefore, it is paramount that whenever you correspond with the IRS, even if this is the simple act of mailing a check, you make sure that you buy a voucher for certified mail.
Getting the CP14 Notice
Here are three steps to take when you get your “balance due” notice:
- Review Your CP14
It is very important that you not only review the CP14 but place your filed tax return alongside to measure up to the information. Evaluate your original tax return to ensure you did not miss any deductions, credits, or income. If you did, then be certain to file an amended tax return. You do not want to make anymore tax errors you might regret.
If the notice is accurate, then you have several options to pay. Other alternative include saving time and reducing penalties. Again, don’t panic. The IRS does give alternate means of handling the situation.
- Determine If the IRS Is Correct
Before agreeing or disagreeing with the Notice CP14, make sure you see if your return had mistakes that led to the evaluation of taxes due. If you discover errors, you will need to pay the amount owed before the payment deadline in order to prevent further penalties and interest.
If you don’t see any errors or you discover a different amount than what the IRS determined, you can call the IRS on the phone number shown on the Notice CP14. An IRS representative will help you in resolving the issue.
- Pay the Amount Due
You can always make the payment shown on the Notice CP14 using IRS Direct Pay, a service that allows you to electronically pay your taxes directly from your savings or checking account. Alternatively, you can pay by credit or debit card.
If you can’t pay the full tax owed, either send a request to the IRS to receive up to an additional 120 days to pay or set up an Installment Agreement Plan. An Installment Agreement gives you the chance to pay your tax bill in fixed monthly installments.
How to pay a CP14 Notice Online?
About 50% of CP14 notices also include tax penalties (often estimated) if you did not file the actual amount or failed to pay your estimated tax payments. If you identify that the IRS is correct in what they are claiming, then you can visit the IRS website and pay online. If you do not have the funds, you can apply for an IRS installment plan to pay the balance incrementally. You may also want to consider an abatement service or the likes of, being that tax debt can be a complex problem to navigate.
When IRS Makes a Mistake
If it is evident that the IRS made a mistake, then you are not going to be responsible for the amount they claim you owe. This can be handled by calling the IRS number posted on the notice itself. However, correspondence with the IRS can be difficult and it is often recommended that you hire a tax professional to assist your case.
Most times, a mistake on a CP14 is not a difficult problem to resolve. Be sure to make copies of all documents you have that hold up your claim, as these will be what you send to the IRS. Again, whatever you mail to them, be sure to do it with official mail. The last thing you want, after they have already made a mistake, is to endanger losing your evidence in the mail.
Alternative Options
While it may seem like the only option is to either pay the balance entirely or dispute the information, the IRS does provide other alternatives. These are typically projected towards helping the taxpayer pay the withstanding amount within their means, rather than ridding of the taxes owed.
An Offer in Compromise
An Offer in Compromise offers you the chance to settle your tax debt in an amount that is less than what you owe. Often, this type of payment is given in one lump sum rather than an installment plan. If you have the funds available, this can be the best option to reduce the losses which would occur by paying the amount your IRS CP14 claims you owe.
More Time
While this is surly case-by-case, you are allowed to ask for more time to pay the amount owed. This usually takes the form of filing an annex through the IRS, which can extend your second deadline up to 120 days.
Decrease the Amount Owed
This is ever more evident for the first-time penalty receiver. If you are looking for a way to reduce the amount in which you owe, then you can request first-time penalty abatement. It is as easy as contacting the IRS, preferably by phone, and requesting penalty relief. Understanding the best way to position yourself in this argument can be difficult. This is another area in which a tax expert can offer great value, as they will know how to phrase your request as well as the dos and don’ts.
Do Not Ignore Your CP14 Notice
Regardless of what route of action you decide upon, know that you should never ignore your CP14 notice. Failure to pay the outstanding amount will result in more fees and interest accrued, and can even land you in legal trouble. Tax debt, once it gets out of hand, can become a criminal offense. At the very least, the IRS can step in and seize your bank account, property, and taxable income.
It may seem like a frightening task to address your CP14 notice but, at the very least, it is paramount that you contact the IRS and clarify your situation. By showing them that you are aware of the issue and addressing it, this can at least hold off the additional penalties and interest.
Hire a Tax Professional
If you do not have the money to pay your balance at once, making a budget for a tax expert can save you money in the long run. They will know how to handle the situation, especially being that CP14 notices are common. Additionally, they can ensure that you amend your tax return, check on your IRS refund status, and guide you through any tax troubles that have surfaced.
Regardless, do not panic about your IRS CP14 notice. There are payments plans, alternative options, and, in the best-case scenario, the IRS can eliminate your penalty entirely.