The most common reason taxpayers receive Notice CP14 from the IRS is missing the filing deadline or underpaying tax liability.
The document is easy to understand as it only requests a payment of due taxes, interests, and penalties. However, the document also provides a guideline for taxpayers who want to try to remove or reduce penalties.
The fastest way to deal with Notice CP14 is to pay the requested amount as soon as possible or explore payment options the IRS offers. So let’s dive deeper into this document and see the best way to respond to it.
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Table of Contents
What is the IRS Notice CP14?
Under Code §6303 Notice and Demand for Tax, the IRS must inform taxpayers how much tax they owe up to two months after charging tax to their accounts. Consequently, taxpayers who fail to pay their taxes or file tax returns on time will likely receive Notice CP14.
The legal timeframe to respond to this notice is five weeks. You’ll receive Notice CP501 if you don’t contact the IRS or settle the tax debt within this timeframe.
Besides pending taxes, these notices also contain all penalties and interest assigned to a tax account. These penalties could be assessed to your account even if you paid all taxes you owe because the IRS uses them to penalize taxpayers that don’t meet deadlines.
Reasons the IRS Issues the Notice CP14
Failing to file a tax return or not paying taxes on time are the most common reasons why taxpayers receive Notice CP14. However, underpayment of estimated tax can also be why you received this notice.
However, the IRS sends a certain percentage of these notices by mistake, so it’s paramount to check their accuracy before taking further steps.
The IRS Notice CP14 Sections
Notice CP14 is a four-page document that contains a detailed record of all penalties and interests charged to a tax account.
The document also explains each penalty and offers information regarding the steps taxpayers can take. Let’s go through the sections of the IRS Notice CP14.
Billing Summary
This section is located at the top of the document’s first page, showing how much money you owe for tax, how much you owe for penalties and interests, and how much you have already paid.
The billing summary also shows the due date by which you must make the payment and the total sum you must pay. In addition, you’ll find a brief description of why the notice was sent next to the billing summary.
What to Do
The document’s first page has the ‘What you need to do immediately’ section instructs the taxpayer to pay the sum outlined in the billing summary section by the set deadline.
Payment instructions are located under this section. You must include the form, tax year, and social security numbers with other payment details. All money orders or checks must be payable to the US Treasury.
This section also contains instructions on what to do if you cannot settle the amount due by the due date. Automatic payroll deductions, payment agreements, or credit card payments are some of the options you’ll have.
What Happens if the IRS Doesn’t Hear From You
The IRS clearly explains what happens if a taxpayer doesn’t take any action before the due date. Hence the total due amount will likely increase, and you’ll probably receive Notice 501.
Penalties
Notice CP14 usually features only three penalties. Depending on the case, the IRS might charge your account with the following penalties:
- Failure-to-file.
- Failure-to-pay.
- Failure to pay properly estimated tax.
Failure-to-file
This penalty would show up in Notice CP14 if you missed the filing deadline. The penalty rate is 5% of the unpaid tax amount per month.
Failure-to-pay
You’ll have to settle the Failure-to-pay penalty if you don’t pay your taxes on time. The penalty rate ranges from 0.5% of the unpaid monthly tax to 25% of that amount.
Failure To Pay Properly Estimated Tax
Besides paying taxes on time, you must also ensure your quarterly tax estimates are accurate. Suppose you don’t calculate these payments correctly. In that case, the IRS will charge you for failing to pay a properly estimated tax penalty.
Penalty Removal and Reduction Instructions
Taxpayers with a justifiable reason to file taxes after the deadline or pay taxes late can send a written explanation to the IRS and work with the agency to resolve the matter.
Moreover, penalties resulting from the inaccurate advice a taxpayer receives from the IRS can be removed.
Interest Charges
The IRS will calculate interest charges based on the unpaid tax from when your tax return was due until you paid all your taxes. You can see the interest rate factor for each period in this section.
Resolving the Notice CP14 Issues
Fixing the issue with Notice CP14 is relatively simple, as you just have to pay the due amount. However, doing so indicates that you accept the penalties and interest charges assigned to your account.
The situation is more complicated if you don’t want to accept these charges because you think they’re incorrect. In that case, you must contact the IRS and work with them to solve the problem.
Aside from determining if Notice CP14 is accurate, you should also decide whether you’re eligible for the penalty abatement and correct all the information in the notice you disagree with.
Once you sort everything out and determine that the amount due is accurate, you can proceed with the payment or request tax relief.
Frequently Asked Questions
The date on the document indicates that taxpayers have three weeks to pay the amount due, but the IRS waits sixty days before initiating collection activities.
The proper response to this notice depends on whether a taxpayer accepts the penalty and interest charges. If you accept, then paying the due amount is the right course of action.
The IRS will continue charging penalties and interest rates to your account if you don’t respond to Notice CP14. You’ll receive Notice CP501 as well as Notice CP503 and CP504 if you don’t take steps to settle your debt.
Taxpayers who received Notice CP14 and cannot pay the full amount they owe by the due date can apply for a payment plan on the IRS website. However, you must make sure you meet the eligibility criteria.
We can do all the talking for you if you don’t want to speak with the IRS on your own and help you assess the accuracy of the Notice CP14 you received. Call 886-800-TAX to schedule a meeting with our CPA, or get in contact with us through our website.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
