IRS Notice CP14: What the Balance Due Letter Means

What a CP14 notice is and why you received one

A CP14 is the bill the IRS is required to send once it records a tax that has not been paid, and it arrives for one of two reasons: you filed a return with a balance you did not pay in full, or the IRS changed a return and the change produced a balance. Section 6303 of the Internal Revenue Code requires the IRS to tell you in writing what you owe within 60 days after the tax is assessed, and the statute calls that letter the notice and demand for payment. The figure has three parts, the tax from the return, the failure-to-pay penalty under section 6651, and interest from the original due date, and each part has its own fix. And under section 6321 a federal tax lien exists by law once ten days pass after the demand without payment, whether or not the IRS ever files a public lien notice, so the claim on what you own is already there.

The deadline on a CP14 and what happens if nothing is done

The pay-by date is generally 21 days from the notice date, or 10 business days when the balance is $100,000 or more, and nothing is seized when it passes; the cost of missing it is the next letter and a larger number. The failure-to-pay penalty runs at 0.5 percent of the unpaid tax for each month or part of a month, up to 25 percent, and interest runs at the federal short-term rate plus 3 percent, compounded daily. About five weeks after the CP14 comes the CP501 reminder, then the CP503, then the CP504, which is the Notice of Intent to Levy under section 6331(d), and then the Final Notice of Intent to Levy and Notice of Your Right to a Hearing, sent as an LT11, a Letter 1058 or a CP90. Only that final notice authorizes a levy on wages or a bank account. Separately, under section 6651(d) the failure-to-pay penalty doubles to 1 percent a month ten days after the CP504 notice of intent to levy goes unanswered.

What to do in the first 30 days

The first 30 days are for checking the number, choosing how to pay it, and telling the IRS which option you chose before the CP501 arrives. In order:

1. Match the tax line on the CP14 to the amount you owe line on the return you filed; if they match, the bill is right.
2. Check your IRS online account before you send money, because payments and notices cross in the mail.
3. If the number is wrong, answer in writing: a short letter to the address on the notice with the proof attached, such as the canceled check or the Form 1040-X.
4. If the number is right and you can pay it, pay it by the date on the notice, then ask for penalty relief; paying the bill does not waive it.
5. If you cannot pay in full, apply for the option below that fits before the pay-by date. A pending installment agreement request stops levy action under section 6331(k).
6. File any unfiled return, because no payment plan, hardship status or offer is approved while a required return is missing.

Your options for the balance

Every CP14 balance is resolved one of seven ways, and the right one depends on the balance, your monthly budget and your penalty history.

• Pay in full. Through your IRS online account, Direct Pay, or a check with the voucher.
• Short-term payment plan. Up to 180 days to pay in full, with no setup fee. Penalty and interest keep running, but the letters stop.
• Installment agreement. Monthly payments under section 6159. Individuals who owe $50,000 or less in combined tax, penalty and interest, and businesses that owe $25,000 or less, can apply online without a financial statement; larger balances go on Form 9465 with a Form 433-F. Once approved, the failure-to-pay penalty drops to 0.25 percent a month.
• Currently not collectible status. For a budget that cannot carry any payment under the IRS Collection Financial Standards. Collection stops, interest runs, and refunds are kept.
• Offer in compromise (OIC). A settlement for less than the balance under section 7122, on Form 656 with Form 433-A (OIC), accepted when the offer meets what the IRS could collect from your assets and future income.
• First-time penalty abatement. When the three prior years had no penalties and every return is filed, the IRS removes the failure-to-pay penalty for one period on request.
• Reasonable-cause abatement. When first-time relief is not available, the penalty can still be removed under section 6651 for a documented reason, on Form 843 or in a letter.

A CP14 carries no right to a Collection Due Process (CDP) hearing; that comes with the Final Notice of Intent to Levy under section 6330 and with a lien filing under section 6320.

What Brotman Law does with a CP14

For a CP14 our work is to verify the balance, remove what should not be on it, and move the account into the option that fits before the sequence reaches a levy notice. The first step is Form 2848, the power of attorney, so the IRS talks to us and copies us on every notice. With that on file we pull the account transcript for the year on the notice and for every other open year, and we compute the ten-year collection statute date for each. If the tax line is wrong, we send the written response with the proof and follow it until the adjustment posts. If it is right, we request penalty abatement, first-time or reasonable cause. For what remains we build the financial statement from three months of bank statements, pay stubs and living expenses, and put the request to the Automated Collection System (ACS), the IRS phone unit for accounts without a revenue officer. A streamlined installment agreement takes one call, hardship status a few weeks, and an offer six to twelve months, so we start one only when the math supports it.

Do you need a lawyer for a CP14?

Usually not: a CP14 with a balance under roughly $50,000, no revenue officer, no levy or lien and no business payroll tax is a payment plan you can set up yourself, and this page has told you how. Confirm the balance online, apply for the plan, and ask for first-time abatement. We would rather say so on the free 15-minute call than sign you up for work you do not need.

Our monthly engagement fits when a revenue officer is assigned, when a levy or a Notice of Federal Tax Lien is in play, when the balance is large, or when the debt is business payroll tax, where the trust fund recovery penalty under section 6672 can reach you personally.

How the monthly flat fee works for a CP14

Many matters like this one run as a monthly flat-fee engagement: one number, agreed up front, that covers agency contact, deadlines, document responses and strategy until the matter resolves. For a CP14 that means the power of attorney, the transcript review, the written response if the balance is wrong, the penalty abatement request, the financial statement and the payment plan, hardship or offer filing, and every call and notice in between.

Documents to gather

Six items answer nearly every question a CP14 raises.

• The CP14 itself, every page, with the envelope.
• The return for that year as filed, and any amended return.
• Proof of every payment for that year: canceled checks, online confirmations, estimated payment records.
• Any earlier IRS letter about the same year, such as a CP11 or CP12 math error notice.
• For a payment plan or hardship status, three months of bank statements and pay stubs and your monthly living expense figures.
• For reasonable-cause penalty relief, the paper behind the reason.

Is a CP14 notice an audit?

No. A CP14 asks for the balance shown on a return you filed, or on a return the IRS adjusted, and it does not question your income or deductions. An audit begins with a different letter that asks for records rather than payment.

What if I already paid the balance on the CP14?

Check your IRS online account. If the payment posted after the notice was printed, the account will show a zero balance or a small remainder of interest. If the payment is not there, send proof of it to the address on the notice.

Can the IRS levy my bank account after a CP14?

Not on a CP14. A levy on wages, a bank account or other property requires the Final Notice of Intent to Levy under section 6330 and a 30-day window to request a hearing, and that notice is three letters and several months away.

How do I get the penalty on a CP14 removed?

Ask for first-time abatement if the three prior years had no penalties and every return is filed; the IRS grants it by phone or by letter. If that is not available, request reasonable-cause relief with a written explanation and the records behind it.

Does setting up a payment plan stop the notices?

Yes. A pending request stops levy action under section 6331(k), and once the agreement is approved the reminders end, an annual statement takes their place, and the failure-to-pay penalty drops to 0.25 percent a month. Miss a payment and the IRS sends a CP523 default notice before it ends the agreement.

How long does the IRS have to collect a CP14 balance?

Ten years from the date the tax was assessed, under section 6502 of the Internal Revenue Code. The clock pauses while an offer in compromise, a Collection Due Process hearing or a bankruptcy is pending, and it keeps running while an approved installment agreement is being paid.

Related pages

The other letters in the sequence:

• IRS collections attorney, the parent page
• IRS Notices CP501 and CP503
• IRS Notice CP504, Notice of Intent to Levy
• Final Notice of Intent to Levy, LT11 and Letter 1058
• IRS revenue officer assigned
• Notice of Federal Tax Lien filed, Letter 3172
• IRS bank levy and wage levy
• Trust fund recovery penalty, Letter 1153
• IRS passport certification, CP508C
• IRS Form 433 financial statement