IRS Notice CP71C – Annual Balance due Reminder Notice is an annual statement of the total unpaid balance due. The Internal Revenue Service (IRS) is reminding taxpayers that they owe tax, penalty and interest. This notice CP71C also explains the denial or revocation of United States passport. It is advisable for taxpayers to know how this can impact them.
REASONS WHY YOU RECEIVED IRS NOTICE CP71C
Here are the main reasons why the IRS sends Notice CP71C to taxpayers.
- You have an unpaid tax balance that may be assigned to a revenue officer for collection action.
- The IRS is sending you a required annual statement of your balance due.
- The notice gives a date you should pay by to avoid additional collection actions.
The first thing to do is to read the notice CP71C carefully. The notice will explain how much you owe and how to make payments to the IRS. If you don’t understand how the IRS came about the amount due, get a tax professional to explain it for you or you can ask the IRS directly.
If you agree with the amount that was calculated by the IRS, you will need to pay the amount by the due date indicated in the notice CP71C sent to you. If you disagree with the amount of tax that was computed by the IRS, you can contact them using the phone number provided on the notice CP71C. The number is usually at the top right corner of the notice. You can tell your tax representative to talk to the IRS on your behalf. Tax experts usually have more experience in dealing with issues like this. After you contact the IRS saying you disagree with the amount they calculated, they will request more information from you so make sure you have all your documents ready when you call.
If you can’t pay the full amount you owe, you will have to make payment arrangements with the IRS. You can call the toll-free number on the top right corner of the notice to discuss payment options. This is usually an installment agreement that allows you to make monthly payments until your debt is covered in full. The agreement you get depends on your financial situation at that time. If you are unable to pay your balance due by the tax return due date (21 days), you can request a payment plan. You will need to file Form 9465, Installment Agreement Request with your tax return or, if your return has already been filed, you can send Form 9465 on its own. If you owe less than $50,000 and can pay your balance due in full within six years, you will not be required to provide financial information to the IRS. However, if you owe over $25,000, you will be required to set up a direct debit installment agreement to avoid the IRS filing a notice of federal tax lien, which can cause you to be denied a loan or access to credit.
You can also qualify for the “offer in compromise” (OIC) program which enables you to settle your tax debt for less than the full amount owed. The IRS doesn’t just give it away, you have to be eligible. The program isn’t for everyone. For you to qualify for the OIC program you must have filed all required tax returns and you must have made any required estimated payments. If you don’t do so, your OIC application will be rejected along with your application fee.
You will be charged interest on the money you owe the IRS. Interest will continue to accrue on your unpaid balance until you pay it in full. If you cannot pay the full amount you owe, you will also receive a late payment penalty.
NOTICE DEADLINE –Taxpayers generally have 21 days to pay the balance due on the notice sent. However, if you miss the deadline, additional penalties and interest will accumulate and the IRS may proceed with enforcement action, such as filing a lien or issuing a levy.
REVOCATION OF PASSPORTS
The reason why your passport would be denied or revoked is that The Fixing America’s Surface Transportation (FAST) Act generally prohibits the State Department from issuing or renewing a passport to a taxpayer with seriously delinquent tax debt.
The Internal Revenue Service (IRS) has repeatedly urged taxpayers to resolve their significant tax debts to avoid putting their United States passports in jeopardy. Taxpayers are advised to contact the IRS immediately if they have a balance due that they are yet to pay in order to avoid problems when they need their passports to travel later on.
The IRS may ask State to exercise its authority to revoke a taxpayer’s passport. For example, the IRS may recommend revocation if the IRS had reversed a taxpayer’s certification because of their promise to pay, and they failed to pay. The IRS may also ask State to revoke a passport if the taxpayer could use offshore activities or interests to resolve their debt but chooses not to.
Under the Fixing America’s Surface Transportation (FAST) Act, the IRS notifies the State Department of taxpayers that are known to owe a serious delinquent tax debt. The amount considered as serious is currently $52,000 or more. The law then requires the State to deny their passport application or renewal to taxpayers as long as they still owe the IRS money. If a taxpayer currently has a valid passport, State may revoke the passport or limit a taxpayer’s ability to travel outside the United States of America.
When the IRS notifies the State of a taxpayer that owes a seriously delinquent tax debt, the taxpayer receives a Notice CP71C from the IRS. The notice explains what steps the taxpayer needs to take to resolve the debt. IRS representatives can help taxpayers resolve the debt. You can call them to set up a payment plan or they will make sure you are aware of other options to settle your tax debt.
One thing is for sure, as soon as you get Notice CP71C, act immediately. Don’t hesitate to ask for help if need be. The IRS can help you out, so can your tax professional. The worst thing to do is nothing. The situation will only get worse.