IRS CP14 notices interrupt summer plans

July 12, 2018 : Annelise Wiens

Summertime means trips to the pool and the beach, barbecues, vacations and for some, IRS balance due notices. The number of taxpayers who received a refund for 2017 dropped 0.3 percent from the previous year, meaning more people had to send the IRS a tax payment when they filed their taxes earlier this year. And those who didn’t make that payment will be getting an IRS notice CP14 this summer, when the IRS sends more than 4 million taxpayers CP14 balance due notices. The extension applies to filing a completed tax return, not to paying any taxes due the IRS.

In addition to reminding taxpayers they have a balance due, the IRS CP14 notices also explain and assess the penalty for not paying in full by the filing deadline. The failure-to-pay penalty is 0.5 percent of the taxes due each month they go unpaid, maxing out at 25 percent.

Many of these notices also include an estimated tax penalty for not withholding enough in taxes or not making quarterly estimated tax payments. Taxpayers are required to make their tax payments throughout the year when they make their income.

“The number of taxpayers who face estimated tax penalties has increased more than 30 percent since 2010. Last year, 9.8 million taxpayers owed estimated tax penalties,” said Jim Buttonow, director of Tax Audit & Notice Services for H&R Block. “As more taxpayers are entering the gig economy and have to make tax payments instead of relying on withholding traditionally done by employers, they often end up with a balance owed when filing.”

The possibly good news, according to Buttonow, for anyone receiving an IRS CP14 balance due notice is that the IRS is not always correct. A Second Look for any missing credits or deductions could reduce taxes and maybe even lead to a refund. If so, an option is to file an amended return.

Even if the notice is correct, there are several options to pay and even an opportunity to reduce penalties:

  • Ask for more time. Taxpayers can get a little more time (up to 120 days) to get all the money together to pay the IRS. Call the IRS and simply request an extension. Make sure to ask the IRS for the full payoff amount at the end of 120 days to avoid being left with any balances.
  • Consider different payment plans.For those who can’t pay a portion or all of the full amount within 120 days, there are different payment plans (called installment agreements), and other options like deferred payment (called currently not collectible status) or settlement (called offer in compromise) for people in hardship situations. Remember that getting into the right agreement is critical to avoid liens and levies, because liens go on public records, and levies take money from wages or bank accounts.
  • Reduce or erase penalties. Taxpayers who haven’t gotten a failure-to-pay penalty in the past three years may be able to ask for first-time penalty abatement. Just call the IRSand request this penalty relief. On the other hand, the estimated tax penalty doesn’t qualify for first-time penalty abatement. A tax professional can help find another penalty relief

A qualified tax professional can help taxpayers determine what’s best for their unique situation — and even represent them before the IRS. Learn more about H&R Block Tax Audit & Notice Services

Media Assets

IRS CP14 notices interrupt summer plans. Jim Buttonow, director of Tax Audit & Notice Services soundbite #1

An extension will give you extra time to get your paperwork to the IRS. But it does not extend the time you have to pay the tax due. You’ll still owe interest on any amount not paid by the deadline. Plus, you may owe penalties.

IRS CP14 notices interrupt summer plans. Jim Buttonow, director of Tax Audit & Notice Services soundbite #2

Taxpayers who can’t pay their taxes start building up penalties. The first is the failure to pay penalty. One other penalty that many taxpayers now face is the estimated tax penalty which the IRS assesses if you do not pay your taxes throughout the year as you earn your income. The number of taxpayers who face estimated tax penalties has increased more than 30 percent since 2010. Last year, 9.8 million taxpayers owed estimated tax penalties. As more taxpayers are entering the gig economy and have to make tax payments instead of relying on withholding traditionally done by employers, they often end up with a balance owed when filing.

IRS CP14 notices interrupt summer plans. Jim Buttonow, director of Tax Audit & Notice Services soundbite #3

Well, here’s three options.
First, ask for more time. Taxpayers can get a little more time up to 120 days that is to get all the money together to pay the IRS. Simply request an extension to pay your taxes.

Consider different payment plans.For those who can’t pay within 120 days extension, there are installment agreements and options for people in hardship situations. Remember that getting into the right agreement is critical to avoid tax liens and levies.

Last, look to reduce or erase penalties. Taxpayers who are new to a failure-to-pay penalty should ask for first-time penalty abatement.

IRS CP14 notices interrupt summer plans. Jim Buttonow, director of Tax Audit & Notice Services soundbite #4

Taxpayers should take immediate action when they receive a letter because delays could result in additional penalties and interest. Not addressing the balance owed can also result in IRS collection efforts. A qualified tax professional can help you determine what’s best for your unique situation, find penalty relief exceptions — and even represent you before the IRS.

Sign Up For The Newsroom Digest

Related Resources

How to avoid the 10 most common tax penalties

Penalties for not filing a tax return or not paying taxes are well-known, but there are many more tax penalties. Knowing how to avoid them when possible, and minimize them when unavoidable, is key.

State tax law changes impact millions

State tax updates will impact your 2017 and 2018 tax returns. H&R Block looks at some tax law changes to prepare for.

Expats face unique tax challenges including missing IRS letters, higher IRS scrutiny

For many expats, working with the IRS has become increasingly difficult including missing IRS letters and higher IRS scrutiny

IRS more likely to question returns than taxpayers think

IRS more than six times more likely to challenge returns than commonly reported

Annelise Wiens

Annelise Wiens

Editor and Producer

As the newsroom editor, Annelise Wiens is interested in more than just tax and industry news, but the stories of H&R Block's 80,000 associates, their communities and H&R Block's world headquarters in Kansas City, Missouri. Wiens joined H&R Block in 2014 from a public relations agency, where she worked with clients in the financial services industry. Before that, she worked as a communicator for a senior member of the United States House of Representatives. She graduated from Biola University in La Mirada, CA with a bachelor's degree in history.

Connect with us