IRS Notice CP71

What is IRS Notice CP71? 

IRS Notice CP71 is a reminder sent by the IRS to taxpayers who have an outstanding tax balance. This notice outlines the summary of the amount owed, including penalties and interest that have accumulated over a period. It serves as a reminder for taxpayers that they still have an unresolved tax liability which requires immediate action. 

Reasons for Receiving IRS Notice CP71 

There are several reasons why a taxpayer may receive a CP71 notice: 

Unpaid Tax Balance 

The most common reason for receiving CP71 is having an outstanding tax debt from the previous tax year. The IRS sends this notice as a reminder that the balance remains due. 

Accrued Interest and Penalties 

The CP71 notice will add additional charges (interests and penalties) that are incurred if the tax balance is not paid in full.  

Missed or Late Payments 

If an installment was not paid after setting up a payment plan, the IRS may send CP71 to inform of the remaining balance and any late fees that have been incurred because of the missed payment. 

Previous Notices Ignored 

If a taxpayer has received a CP-series notice before, but no action was taken, the taxpayer will receive a CP71 notice as a reminder to respond. 

Collections Reminder 

CP71 acts as a final warning before the IRS escalates collection efforts, which could include wage garnishment, tax liens, or levies. 

How to Resolve IRS Notice CP71 

Here are a few ways a taxpayer can resolve IRS Notice CP71: 

Paying the tax debt in full 

The fastest way to resolve a CP71notice is to pay the full amount owed. This can be done online through the IRS Direct Pay system, mailing a check to the IRS, or via credit or debit card. 

Set up a Payment Plan 

If the full amount cannot be paid immediately, the IRS allows taxpayers to opt for a Payment Plan. Either short-term payment plans for balances under $100,000 (to be paid within 180 days) and long-term installment plan for balances under $50,000 (to be paid over several months or years). 

Request a Penalty Abatement 

In situations beyond control such as financial hardship, medical emergency or natural disasters, the taxpayer may be able to request a penalty abatement. 

Consider an Offer in Compromise (OIC) 

Taxpayers experiencing severe financial hardship may be eligible for Offer in Compromise (OIC) which settles the tax debt for less than the full amount owed.  

Contact the IRS for Hardship Relief 

In extreme financial hardship cases, the IRS may temporarily delay collection efforts until the financial situation improves.  

Verify the Notice for Errors 

In some cases, the notice can be disputed by providing documentation and comparing the IRS records with the tax filings and payments made.