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What is a ‘Notice CP14’ and How Do You Respond?

Unless you are expecting a refund check in the mail, no one wants to get a letter from the Internal Revenue Service (IRS). This is particularly true when it comes to Notice CP14. This document is how the IRS notifies taxpayers that they owe unpaid taxes.

When you get a Notice CP14, the first thing that you should do is read it carefully to see exactly how much you owe, the payment due date, and how to pay. Depending on your situation, you may pay the amount in full, set up a payment plan, file an offer in compromise, or even contest the amount due. A Virginia Beach tax lawyer can analyze the CP14 Notice and help you determine the best course of action based on the underlying facts of your case.

At Poole Brooke Plumlee PC, we provide the highest quality legal representation to clients throughout Virginia. We advocate for our clients before the IRS and the Virginia Department of Taxation. Reach out today to schedule a consultation with a member of our legal team.

What Is a Notice CP14?

A Notice CP14 is a letter sent by the IRS to taxpayers that informs them that they owe the government money. If you have received a Notice CP14, then the IRS has determined – based on an analysis of your tax returns – that you have underpaid on taxes.

This notice will explain how much you owe to the IRS, and provide a due date for paying off the balance. It will also contain instructions for how you can make a payment.

If you pay the balance in full by the due date, then you will not be charged additional interest on the unpaid amount or additional penalty for late payment. However, if you do not pay the full amount, then interest and penalties will continue to accrue on any unpaid balance. Typically, the IRS will request payment within 21 days. If you do not pay the amount due, the IRS may begin collection proceedings.

Although you may be tempted to toss the Notice CP14 aside, it is important to read it carefully and respond appropriately. This does not necessarily mean paying the balance in full. It is possible that the IRS made a mistake in calculating your unpaid taxes. In this situation, you can dispute the amount due.

If you cannot pay the full amount, you may be able to work out an alternative arrangement, such as a payment plan, an offer in compromise or even a temporary delay if you are experiencing financial hardship. The most important thing is to not ignore the notice. By not responding to a CP14 Notice, you could open yourself up to aggressive collection actions such as bank levies and wage garnishments.

What Should I Do If I Get a Notice CP14 from the IRS?

As noted above, the first thing that you should do is carefully review the Notice CP14 as soon as you receive it. You should also check your own tax records to be sure that the IRS’ calculation is correct.

If you agree with the IRS’s determination and can pay the balance in full, then the easiest course of action is to make the payment. You can pay the IRS via check or online. Before making the payment, you may want to check with your tax professional to make sure that the assessed amount is correct.

If you agree with the IRS, but cannot pay the balance in full, you have several options. First, you can apply for a payment plan through the IRS website. Payment plans typically involve making installment payments over a period of time.  You may be able to ask the IRS to remove late payment penalties if you qualify. 

Second, if you are experiencing financial hardship, you could request a temporary delay in the collection process. If the IRS determines that you cannot pay any of your tax debt, it may deem your account currently not collectible. This does not mean that the IRS will waive your unpaid tax balance; instead, it will delay collection until your financial situation improves. 

This might not be the best option for most taxpayers, as interest and penalties will accrue until you pay in full. While it may be a way to delay the collection of unpaid taxes, the final bill will be significantly higher – which can be difficult for many people to handle. If you find yourself in this situation, you should talk to a tax attorney before applying for a temporary delay in collection.

Third, you may request an offer in compromise, which is essentially an agreement between the IRS and a taxpayer to settle the debt for a negotiated amount. The IRS generally agrees to offers in compromise as a way to collect as much as possible, as quickly as possible, while costing the government as little as possible in collection costs.

The IRS will accept an offer in compromise for three reasons:

  1. Doubt as to collectibility
  2. Doubt as to liability
  3. Effective tax administration

In other words, the IRS may accept a lower amount if it thinks that it cannot collect the full amount of unpaid taxes, agrees that you may not owe the full amount, or that there are solid public policy reasons to not pursue the tax collection. If you do not qualify based on one of these three grounds, then you are not eligible for an offer in compromise.

An offer in compromise is not automatic. Instead, you must submit an application to the IRS with an offer to settle the tax debt for the full amount owed. The offer amount must be very carefully calculated to increase the likelihood that the IRS will accept it based on reasonable collection potential, or the amount that the IRS could reasonably expect to collect before the statute of limitations expires for your tax debt.

Taxpayers should not submit an offer in compromise without the assistance of an experienced Virginia Beach tax lawyer. The IRS will only accept an offer in compromise from taxpayers who meet the requirements to submit an application and will only accept the offer itself if it is based on one of the three grounds listed above. A skilled attorney will evaluate your situation, determine if you qualify, and work with you to determine an appropriate offer.

Finally, if you disagree with the assessed taxes, you can dispute the Notice CP14. There are situations where the IRS makes a mistake, or even sends out a Notice CP14 prematurely. This has occurred more frequently in recent years because the IRS has a significant backlog, The CP14 notices are sent out automatically, which means that you may get a notice before the IRS has fully processed your payment. If you have a canceled check or bank statement showing that you paid your taxes, then the Notice CP14 was likely sent in error.

If you disagree with the Notice CP14, you should not ignore the document. Instead, you should reach out to a seasoned Virginia tax attorney. A lawyer can review your tax documents and help you determine the best course of action based on your specific situation. You may be able to file an amended tax return or file a dispute in writing.

How Our Law Firm Can Help

Getting hit with an unexpected tax bill can be challenging for anyone. If you have received a Notice CP14, you have options. Our law firm can work with you to develop a strategy for handling any unpaid federal taxes, which may include seeking a settlement through an offer in compromise or disputing the amount due.

Poole Brooke Plumlee PC represents individuals and businesses in the Commonwealth of Virginia who are facing federal and state tax issues. In each case, our goal is to help our clients resolve their tax matters in a way that is most favorable to them and that protects their interests. To learn more or to schedule a consultation with a Virginia Beach tax attorney, give our law office a call at (757) 499-1841 or fill out our online contact form.

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