CP71A Notice: IRS Reminder of Your Unpaid Tax Debt
Summary:
The CP71A Notice is a reminder from the IRS about an outstanding tax balance on your account. It indicates that your account is currently in non-collectible status due to financial hardship. While no immediate action is required if your situation hasn’t changed, it’s important to keep filing taxes on time, explore payment options, and stay informed about potential interest and penalties. The notice serves as a reminder rather than a collection attempt but highlights the importance of keeping the IRS updated on changes in your financial circumstances.
Receiving a notice from the IRS can be a nerve-wracking experience. If you’ve recently received a CP71A Notice, you may be wondering what it means for you and what steps, if any, you need to take. The CP71A Notice serves as a reminder that you have an outstanding balance on your tax account. While the IRS recognizes your financial hardship by placing your account in a “Currently Not Collectible” (CNC) status, it’s crucial to understand what this notice entails and what actions may be necessary down the road.
In this article, we’ll break down what the CP71A Notice means, why you received it, and the steps you should take to manage your tax obligations effectively.
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What is a CP71A notice?
The IRS sends a CP71A Notice to remind you of an outstanding balance on your tax account. This notice usually arrives annually for taxpayers whose accounts are classified as “Currently Not Collectible” due to their financial situation. The IRS recognizes that you’re unable to make payments on your tax debt at this time. However, the CP71A Notice acts as a gentle reminder that your tax debt still exists, and interest or penalties may continue to accrue.
While this notice isn’t a collection attempt, it serves as a record of your outstanding balance and reminds you to inform the IRS if your financial situation changes.
Pro Tip
Set up IRS account alerts online to get real-time notifications on any changes to your tax return or account. This helps you stay updated on adjustments and due dates.
Why does the IRS send CP71A notices?
The IRS issues CP71A notices to keep taxpayers informed about their account status and outstanding tax liabilities. By sending this annual reminder, the IRS ensures that you remain aware of your tax debt, even if no immediate payment is required. It’s also a way for the IRS to encourage taxpayers to review their financial situation annually and update the IRS if they become able to make payments toward their balance.
Who typically receives a CP71A notice?
If your account is in Currently Not Collectible status, you will likely receive a CP71A notice. Taxpayers who experience significant financial hardship and cannot make payments toward their tax debt can apply for CNC status. This status halts active collection efforts by the IRS, such as wage garnishments or liens, but it does not eliminate the debt. The CP71A serves as an annual reminder of your outstanding tax liability.
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What should you do when you receive a CP71A notice?
When you receive a CP71A notice, it’s important to carefully review its contents. Here’s what you should do:
- Read the notice thoroughly to confirm that your account is still in non-collectible status and verify the outstanding balance.
- If your financial situation has changed, contact the IRS to discuss your payment options, such as setting up an installment agreement or making an Offer in Compromise (OIC).
- If your financial situation hasn’t changed, continue to file your taxes on time and monitor your account balance to avoid additional penalties or interest.
- Consider contacting a tax professional if you’re unsure how to handle the notice or if you’re exploring payment options.
Pro Tip
Always file your taxes on time, even if you can’t make a payment. Timely filing avoids late filing penalties, and you can still work on a payment arrangement with the IRS.
How the CP71A notice affects you
Receiving a CP71A notice means that the IRS acknowledges your financial hardship, but your tax debt remains active. Here’s how it can impact you:
- Interest and penalties may continue: Although you’re not required to make payments immediately, interest and penalties may still accrue on your unpaid balance. This could increase the total amount you owe over time.
- Non-collectible status: Your account remains in non-collectible status, meaning the IRS won’t take aggressive collection actions like wage garnishment or liens. However, this status isn’t permanent and can change if your financial situation improves.
- Potential future actions: If the IRS finds that your financial situation has improved, they may remove your account from non-collectible status and resume collection activities. It’s important to keep the IRS updated on your financial status.
Payment options and next steps
If your financial situation changes, it’s a good idea to explore payment options to settle your outstanding balance. Here are some common options:
Installment agreement
An installment agreement allows you to pay off your tax debt in monthly installments over time. You can apply for a payment plan through the IRS’s website or by submitting Form 9465, Installment Agreement Request. This option is beneficial if you can’t pay your entire tax balance at once but can make manageable monthly payments.
Offer in compromise (OIC)
An Offer in Compromise lets you settle your tax debt for less than the full amount owed. This is an option for taxpayers who can’t afford to pay their full balance and meet specific financial criteria. The IRS will evaluate your income, expenses, and assets to determine whether you qualify. It’s important to note that not everyone qualifies for an OIC, so be sure to review the requirements or consult a tax professional before applying.
Partial payment installment agreement
If you can’t afford to pay your tax debt in full, even through an installment agreement, a partial payment installment agreement (PPIA) might be a viable option. Under a PPIA, you pay a reduced monthly amount that the IRS agrees upon based on your financial circumstances. This option allows you to pay down your debt over time, but the balance may still accrue interest and penalties.
Pro Tip
Consult a tax professional if you’re unsure about handling your CP71A notice or your tax debt. They can guide you through options like CNC status, installment agreements, or offers in compromise.
Seeking professional help
If you are unsure how to handle your CP71A notice or manage your tax debt, seeking professional help can be a smart decision. Tax issues can become complex, and a certified tax professional, such as a CPA, enrolled agent, or tax attorney, can provide invaluable assistance. Here are some reasons to consider hiring a professional:
- Expert guidance: A tax professional can help you understand your options, including installment agreements, Offers in Compromise, or maintaining your CNC status.
- Accuracy: Professionals can help ensure that all your documents and financial statements are accurately prepared and submitted, reducing the risk of mistakes that could lead to further penalties.
- Negotiation with the IRS: If needed, a tax professional can represent you in discussions with the IRS, helping you navigate negotiations or disputes.
- Peace of mind: By working with an expert, you can reduce the stress and uncertainty of managing tax debt on your own.
Ultimately, seeking help from a certified tax professional can make the process of resolving your CP71A notice much smoother and help you achieve the best possible outcome.
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Frequently asked questions
What does “currently not collectible” (CNC) status mean?
CNC status means that the IRS has determined you are unable to pay your tax debt due to financial hardship. While your debt still exists and accrues interest, the IRS temporarily suspends active collection efforts, such as wage garnishments or liens. However, this status is not permanent. The IRS will periodically review your financial situation to determine whether you’re able to make payments in the future.
Will I still receive penalties and interest while in CNC status?
Yes, even while your account is in CNC status, interest and penalties continue to accrue on your unpaid tax balance. These additional charges will increase the total amount you owe over time, so it’s a good idea to explore payment options if your financial situation improves.
How can I update my financial situation with the IRS?
If your financial situation changes, you should contact the IRS to update your status. You can do this by providing updated financial documentation or discussing payment options, such as installment agreements or an Offer in Compromise. It’s important to inform the IRS promptly to avoid future collection actions or penalties.
Can the IRS remove my CNC status without notifying me?
No, the IRS is required to notify you before removing your CNC status. The IRS will review your financial information periodically and, if they determine that you are able to make payments, they will notify you of the status change. At that point, you may be required to start making payments or explore other options like a payment plan.
What happens if I ignore a CP71A notice?
Ignoring a CP71A notice can have serious consequences. While the notice itself isn’t a collection attempt, failing to respond or take action could result in penalties, additional interest, or a loss of CNC status. It’s important to stay proactive with the IRS and keep them informed about your financial situation to avoid complications.
Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.
| CP01 | The IRS verified your claim of identity theft and will monitor your account. |
| CP01H | The IRS received a tax return with a social security number that belongs to a dead person. |
| CP02H | Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma. |
| CP03C | You received the First-Time Homebuyer Credit for a house you purchased. |
| CP04 | You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. |
| CP08 | You may be entitled to additional money due to the Additional Child Tax Credit. |
| CP10 | Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP10A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP11 | You owe money because the IRS amended your return due to a miscalculation. |
| CP11A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed. |
| CP11M | Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP12 | You are due a bigger refund because the IRS corrected one or more mistakes on your tax return. |
| CP12A | The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return. |
| CP12E or CP12F | The IRS corrected a miscalculation on your return. |
| CP12M | The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return. |
| CP12R | The IRS made changes to the computation of the Rebate Recovery Credit on your return. |
| CP13 | The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero. |
| CP13A | The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero. |
| CP13M | The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero. |
| CP13R | The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero. |
| CP14 | You owe money on unpaid taxes. |
| CP16 | The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts. |
| CP21A | You owe money due to the changes you requested that the IRS make on your tax returns. |
| CP21B | You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks. |
| CP21C | The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero. |
| CP21E | As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes. |
| CP21I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP22A | The IRS made the changes you requested, and you owe money as a result. |
| CP22E | As a result of your recent audit, the IRS changed your tax return, and you now owe money. |
| CP22I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP23 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes. |
| CP24 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP24E | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP25 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero. |
| CP31 | You need to update your address because your refund check was returned to the IRS. |
| CP45 | The IRS was unable to apply your overpayment to your estimated tax as you requested. |
| CP49 | The IRS used all or part of your refund to pay a tax debt. |
| CP53 | Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit. |
| CP57 | The bank declined your payment, so the IRS was unable to draft funds from your bank account. |
| CP71 | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71A | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71C | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71D | A reminder of the amount you owe in tax, penalty, and interest. |
| CP88 | The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax. |
| CP90 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing. |
| CP91 | The IRS will levy up to 15% of your social security benefits for unpaid taxes. |
| CP120 | The IRS needs documentation of your tax-exempt status. |
| CP120A | Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years. |
| CP130 | You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed. |
| CP152 | The IRS received your return. |
| CP153 | The IRS will send your refund by mail because your direct deposit did not go through. |
| CP161 | You have an unpaid balance due to the IRS. |
| CP166 | Your monthly payment to the IRS did not go through due to insufficient funds in your bank account. |
| CP178 | You may no longer owe excise tax because your tax return filing requirements changed. |
| CP231 | You need to update your address because your refund was returned to the IRS. |
| CP259 | You did not file the business tax return identified in the notice. |
| CP259A | You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard). |
| CP259B | The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259C | The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259D | You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return. |
| CP259E | You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP259F | The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return. |
| CP259G | The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. |
| CP259H | As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP276A | You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time. |
| CP276B | The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time. |
| CP297 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP297A | The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP298 | The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes. |
| CP501 | You have a balance due on one of your tax accounts. |
| CP503 | You have an unpaid balance on one of your accounts, and the IRS has not heard from you. |
| CP504 | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe. |
| CP504B | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe. |
| CP521 | A reminder that you have an installment agreement payment due. |
| CP523 | You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets. |
| CP601 | Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas. |
| CP603 | No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas. |
| CP604 | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda. |
| CP604B | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda. |
| CP621 | Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente. |
| CP623 | Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo. |
| CP711 | Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones. |
| CP721 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP722 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP771 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP772 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP773 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP774 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP959 | Usted no radicó su planilla de contribución de negocios identificada en este aviso. |
| CP2000 | The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due. |
| CP3219A | The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. |
| CP3219N | The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days. |
| Letter 0012C | The IRS needs additional information to process your tax return. |
| Letter 0484C | The IRS wants a completed |
| Letter 0525 | Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed. |
| Letter 531 | IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return. |
| Letter 0668D(LP 68) | The IRS released their levy. |
| Letter 0549C | Your tax bill was paid. |
| Letter 0681C | The IRS accepted your payment proposal. However, this is not a formal Installment Agreement. |
| Letter 0757C | You did not adhere to the terms of your Installment Agreement. |
| Letter LT 11 | The IRS plans to seize your property or rights to property. |
| Letter 1058 | The IRS has not received your payment. It plans to seize your property or rights to property. |
| Letter 1615 (LT 18) | You must respond to the IRS within 10 days of this notice regarding past due tax returns. |
| Letter 1737 (LT 27) | Complete and sign Form 433F, Collection Information Statement. |
| Letter 1961C | Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify. |
| Letter 1962C | Your application for a |
| Letter 2050 (LT 16) | The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed. |
| Letter 2257C | The IRS is providing the payoff amount that you requested. |
| Letter 226-J | An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP). |
| Letter 2271C | A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information. |
| Letter 2272C | An IRS letter explaining why your request to pay the balance due in installments was declined. |
| Letter 2273C | A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included. |
| Letter 2318C | A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged. |
| Letter 2357C | The IRS is admitting that it did not send you the balance due notices that it should have. |
| Letter 2603C | The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property. |
| Letter 2604C | The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction. |
| Letter 2761C | The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer. |
| Letter 2789C | An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid. |
| Letter 2840C | Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify). |
| Letter 3030C | Provides an explanation of the tax, penalty, and interest still due on your account. |
| Letter 3127C | A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities. |
| Letter 3174 | A reminder of taxes due after the IRS has sent a Notice of Intent to Levy. |
| Letter 3217C | The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify). |
| Letter 3228 (LT 39) | A request to pay the balance due within 10 days using the envelope provided. |
| Letter 3500 | The IRS has received your documents, and it needs additional time to review them. |
| Letter 3572 | Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment. |
| Letter 4883C | The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately. |
| Letter 4903 (LT 26) | You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response. |
| Letter LP 47 | The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address. |
| Letter LP 59 | The IRS has not received a response to the notice of levy it previously sent. |
| Audit Letter 2205 | The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit). |
| Letter 915 | You recently underwent an audit, and the IRS informs you that you now owe taxes. |
Key takeaways
- The CP71A notice serves as a reminder of your outstanding tax balance, not a demand for payment.
- Your account remains in non-collectible status if you can’t afford to pay the debt, but interest and penalties may continue to accrue.
- Consider payment options like installment agreements or Offers in Compromise if your financial situation improves.
- Keep the IRS updated on any changes in your financial circumstances to avoid future complications.
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