IRS CP14 Notice: How To Understand & Review Your Balance

IRS CP14 Notice: How To Understand & Review Your Balance

If you received a CP14 Notice in the mail recently, you may be confused and asking yourself, “What is this and why was it sent to me?” An IRS Notice CP14 indicates that you owe the IRS money. This is for one of two reasons: you either missed—or, in rarer cases, misapplied—a payment, or interest and penalties accrued on the outstanding amount. 

This notice may come as an unpleasant surprise. It can even seem like a devastating blow if you’re not financially prepared to pay the tax debt you owe. However, a CP14 Notice isn’t too difficult to deal with and you have a number of options at your disposal as far as payment goes. 

It is also important to know that it is within your rights 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 Notice CP14 should be to meticulously review the IRS’ claims and question their validity. 

In this article, we’ll take an in-depth look at what this notice is, why you received it, and how to respond to an IRS CP14 Notice. Read on for further information about Notice CP14 or use the links below to skip to any section. 

What Is IRS Notice CP14: Reason for Payment?

If you receive a CP14 Notice, it’s the IRS’ way of telling you that you owe money on unpaid taxes. Perhaps you made a mistake when filing your taxes, miscalculated certain figures, or simply neglected to pay a tax debt. Whatever the case may be, it’s important for you to promptly resolve your debt in order to get in good standing with the IRS and avoid the accrual of interest and penalties. 

 

When you receive IRS Notice CP14, the first thing you should do is read over the document. It will tell you how much the IRS believes you owe, how you can pay the debt, and when the debt needs to be paid by. The notice should also contain contact information for the IRS, so that you can reach out to them in case there’s been a mistake or you dispute the total amount owed. 

Why Did I Receive an IRS CP14 Notice?

The IRS sent you a CP14 Notice because they believe you owe a tax debt that has not been paid. The reason that the IRS claims you owe money is due to your tax return. Either you did not pay within the given deadline, or you did not claim the correct amount owed. 

It’s also possible that the IRS made a mistake in sending you a CP14 Notice. Perhaps you already paid the tax debt you owed, but, for some reason or another, your payment didn’t register in their records. In the case that you already paid, you will have to provide proof of payment. 

Therefore, it is extremely important to keep meticulous records whenever you correspond with the IRS, even if it is an act as simple as mailing a check. If you’re sending out physical mail, make sure to use Certified Mail so that you receive a receipt and an electronic notification when the item is delivered. On the other hand, if you’re communicating with the IRS on the web or sending payments online, it’s imperative to keep all emails, digital receipts, and other kinds of electronic documentation. 

Review Your CP14

It is imperative that you not only review the CP14 Notice, but place your filed tax return side-by-side with it to compare the information. Review your original tax return to ensure you did not miss any deductions, credits, or income. If you did, then be sure to file an amended tax return. You do not want to make any more tax mistakes you might regret.

If the notice is correct, then you have several options when it comes to how you pay. If, for some reason, you don’t want to or can’t pay the full tax debt upfront, there are other routes you can take to potentially save yourself time and reduce the amount you owe. Again, don’t panic—the IRS provides you with a variety of different ways to handle this situation.

Regardless of which route of action you decide upon, know that you should never ignore your CP14 Notice. Failure to pay the outstanding amount will likely result in more fees, accrue more interest, and may even land you in legal trouble. Tax debt, once it escalates, 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 daunting task to address your CP14 Notice but, at the very least, it is paramount that you contact the IRS and explain your situation. By showing them that you are aware of the issue and addressing it, this can at least give you a better shot at preventing additional penalties and interest.

How to Pay Your IRS CP14 Notice Online

Paying your IRS CP14 Notice online is typically the easiest, quickest, and most efficient way to eliminate your debt and get in good standing with the IRS. If you recognize 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. If you owe a significant tax debt, you may also want to consider consulting with a tax professional and securing abatement services that can potentially remove any tax penalties and minimize the total amount you have to pay.

Alternative Options

While it may seem like the only option is to either pay the balance outright or dispute the information, the IRS does provide other alternatives. It’s unlikely that the IRS will eliminate your tax debt entirely, but most of the time they will work with you to come up with a plan that takes into account your financial situation and current income. Below, we’ll go over some of the payment options available to you in the case that you don’t want to, or can’t, pay your tax debt outright. 

An Offer in Compromise

An offer in compromise allows you to settle your tax debt by agreeing to pay an amount that is less than what you owe. Taxpayers are often required to pay an offer in compromise via a single lump sum payment rather than an installment plan. 

This payment method benefits both parties—it allows you to lower your total tax debt, and the IRS still gets most of the money it’s owed without having to deal with organizing a payment plan, going to court, and so on. If you have the funds available, an offer in compromise can be the best option to minimize the debt laid out by the IRS CP14 that was sent to you.

More Time

While this is certainly case-by-case, you are allowed to ask for more time to pay the amount owed. Filing an extension through the IRS can extend your payment deadline up to 120 days. However, an extension or delay in the collections process is typically reserved for those people who can’t pay any part of their tax debt. 

If the IRS determines that you’re unable to pay the tax debt you owe according to your CP14 Notice, they may report your account as not collectible and place a temporary hold on the collections process. This doesn’t mean that your tax debt goes away, it just temporarily pauses the collections process until you’re in a better financial situation. In order for an extension to be approved, you may be required to fill out a Collection Information Statement and provide the IRS with proof that you’re unable to pay. 

Decrease the Amount Owed

In the case that this is your first time receiving a tax penalty, you may be able to decrease the amount you owe. If you are looking for a way to reduce the amount you owe, then you can ask for a first-time penalty abatement. 

To see if you qualify for a first-time penalty abatement, you can usually call the toll-free number on your IRS CP14 Notice. Understanding the best way to position yourself in this argument can be difficult. This is another area in which a tax professional can provide great value, as they can help you navigate the situation and negotiate the amount owed.

What to Do if There Was a Mistake

If it is obvious that the IRS made a mistake, then you are not going to be liable for the amount they claim you owe. This can be handled by calling the toll-free IRS number posted on the notice itself. However, correspondence with the IRS can be tricky and it is often recommended that you hire a tax professional to assist you in your case.

Most of the time, a mistake on a CP14 Notice is an easy problem to rectify. Be sure to make copies of all documents you have that support your claim, as these will be what you send to the IRS. Again, whatever you mail to them, be sure to do it with Certified Mail. After they have already made a mistake, the last thing you want is to risk losing your evidence in the mail.

Takeaways 

Even if you do not have the money to pay your balance outright, budgeting for a tax professional can save you money in the long run. They will know how to handle the situation, especially since CP14 Notices are fairly common. Additionally, a tax professional can help you amend your tax return, check on your IRS refund status, and guide you through any tax troubles that have surfaced.

The bottom line is that there’s no need to panic about your IRS CP14 Notice. You have many options at your disposal when it comes to payment and the IRS will almost always work with you to come up with a reasonable payment plan. If you’ve received a CP14 Notice and want help in dealing with it, contact the experts at Community Tax. We’ll help you sort through payment options, come up with a plan, and minimize your tax debt!