By Pedro Bianco
En esta noticia
Coming across an IRS letter demanding money is a tense moment for anyone. But if the code that appears is “CP14”, it is worth knowing that this is the first step in the collection process, not the last, and that there is still time and options to resolve it before the debt grows.
What is the CP14 letter?
The CP14 is the first notice of balance due sent by the IRS and, in fact, the agency’s most common notice. It arrives when the taxpayer filed their return but left a tax unpaid, or when the IRS determined that there is an outstanding balance. The letter details the total amount owed, which is not just the tax: it already includes the penalties and interest accumulated up to that point.
The CP14 is the starting point. If there is no response, the IRS then sends other letters (such as CP501, CP503 and CP504) that escalate until eventually reaching more serious collection actions. But at this first stage, the tone is informational and there is plenty of room to resolve the issue.
How many days are there to act?
The CP14 requests payment within 21 days. For very large debts, of $100,000 or more, that deadline is reduced to 10 days. The exact deadline is printed on the letter itself, so the first thing is to find it and not let time pass, because interest and penalties continue to accrue while the debt remains unpaid.
Interest accrues daily and is calculated from the original due date of the return, not from the date of the letter; and the failure-to-pay penalty amounts to 0.5% per month on the unpaid balance, up to a maximum of 25%. That is why the sooner it is resolved, the less is paid.
What to do when you receive it
There are two ways to resolve the situation:
- Pay the full amount, through the IRS payment options at irs.gov/payments or from the taxpayer’s Online Account.
- If you cannot pay everything at once, contact the IRS to arrange a payment plan in installments (installment agreement). There are short-term plans, of up to 120 days, and long-term plans.