The Internal Revenue Service (IRS) will deliver millions of letters to taxpayers who it suspects have underpaid the tax agency this month. According to Mark Steber, chief tax information officer at Jackson Hewitt, it’s critical to pay attention to this letter, known as a CP14, because failing to do so could result in fines.
According to Steber, the IRS sends out about 9 million of these letters each year. Due to the pandemic, the agency has stopped distributing many types of notices and letters, thus the letter is uncommon this year. The IRS said in February that it would stop mailing more than ten different sorts of letters, ranging from failure to file a tax return to under-withholding taxes.
If the IRS calculates that a taxpayer’s account balance is more than $5, it will send a CP14. This can be due to a variety of issues, such as failure to report some income or failure to pay a balance in full. According to the Taxpayer Advocate Service, the CP14 will tell you how much you owe and request payment within 21 days. It is one of the most common notices sent to taxpayers.
“The CP14 is a notice of a balance of taxes owing, which is why they aren’t suspended,” Steber explained. “It is in the taxpayer’s best interest to be aware that they owe money so that penalties and interest do not accumulate.”
The IRS is required to send CP14 notices within 60 days of assessing a tax liability, which means that taxpayers who filed their taxes before the mid-April tax deadline may receive them in June.
What if I don’t make a payment?
First, the IRS states it will not charge you interest if you pay the whole amount by the due date listed on the CP14. After that, your balance will begin to accrue interest.
To avoid additional costs and inconvenience, Steber recommends taxpayers read the letter carefully and take action to address the balance outstanding.
Unpaid taxes are assessed at a rate of 0.5 per cent per month, up to a maximum of 25% of the entire balance outstanding, which can quickly pile up. If you don’t pay the sum due within 60 days, the IRS can take steps to collect the debt, including placing a lien on your property, such as your home or car.
“The IRS is skilled at a lot of things, and one of them is obtaining people’s money,” Steber added.
What should I do if I am unable to make a payment?
The IRS has stated that it will work with taxpayers to establish a payment plan. The IRS can do so by filling out an online form.
According to the IRS, taxpayers who are experiencing financial hardship can apply for a temporary collection delay until they can get back on their feet. (For more information on applying for a delay, visit the IRS website.)
What if I believe the CP14 letter to be incorrect?
If you believe the notice is wrong, contact the IRS. If you have previously paid the tax that the IRS claims you owe, be prepared to document your case, such as through payment documents, Steber advised.
Read more:-
- Stimulus Rental Assistance Dispute
- In June, Three States Will Issue Stimulus Checks – Here’s All You Need to Know
- Following a Series of Tragic Plane Crashes, Congress May Direct the Pentagon’s Attention to the Causes
The IRS will supply you with a phone number on the CP14 letter, but he added that the agency has been difficult to reach by phone. You can also mail your paperwork and the letter to the IRS using the contact information provided in the letter.
