IRS CP71C Notice: What Is It and How Should You Respond?
Summary:
The IRS CP71C Notice serves as an annual reminder of the unpaid tax balance you owe, including any penalties and interest. It highlights your outstanding tax debt and emphasizes the urgency of addressing it. Additionally, it warns of potential consequences, such as the U.S. Department of State’s authority to deny or revoke your passport if your debt is considered seriously delinquent. Understanding this notice and responding promptly can help you resolve your tax issues and avoid further complications.
Receiving an IRS CP71C Notice can be unsettling, but it’s important to take it seriously and act quickly. This notice indicates an unpaid tax balance and provides options to resolve it, whether through payment, installment plans, or other arrangements. Ignoring it could result in severe penalties, additional interest, or even enforcement actions like a federal tax lien. This guide will help you understand the CP71C Notice and navigate your next steps effectively.
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What is the IRS CP71C notice?
The IRS CP71C Notice is a formal communication sent annually to remind taxpayers of their unpaid federal tax balance. It includes details about the total amount owed, encompassing the original tax debt, penalties for late payment, and interest accrued over time. The notice also serves as a warning about potential consequences, such as the U.S. Department of State’s authority to deny or revoke your passport if you have seriously delinquent tax debt.
Why does the IRS issue the CP71C notice?
This notice is sent to ensure taxpayers are aware of their outstanding debt and encourage them to take action. It reflects the IRS’s commitment to resolving unpaid taxes while offering taxpayers options to settle their debt. The notice serves as both a reminder and a warning about the escalating consequences of non-payment.
What information is included in the IRS CP71C notice?
The CP71C Notice contains crucial information, including:
- Tax period: The specific period for which taxes are owed.
- Outstanding balance: The total amount you owe, including tax, penalties, and interest.
- Payment options: Steps to pay the amount owed or set up a payment arrangement.
- Warning of consequences: Potential legal and financial repercussions of ignoring the notice.
- Contact details: IRS contact information for further clarification or dispute resolution.
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.
What does “seriously delinquent tax debt” mean?
The term “seriously delinquent tax debt” refers to unpaid federal tax debts exceeding $55,000 (adjusted annually for inflation) that the IRS has assessed and pursued through legal enforcement, such as filing a lien or issuing a levy. Under the Fixing America’s Surface Transportation (FAST) Act, taxpayers with such debt risk losing their passports.
How does seriously delinquent tax debt affect your passport?
If your debt is classified as seriously delinquent, the IRS may certify your account to the U.S. Department of State. This certification allows the State Department to deny your passport application, renewal, or even revoke an existing passport. The only way to resolve this is to pay your debt in full, establish a payment agreement, or prove financial hardship to the IRS.
Pro Tip
Consult a tax professional or Low-Income Taxpayer Clinic (LITC) early if you’re unsure how to respond to the notice. They can guide you through the process and help you avoid costly mistakes.
How to understand the details in the IRS CP71C notice
When you receive the CP71C Notice, review it carefully to understand the key components:
- Amount owed: This includes the original tax amount, penalties for late payment, and interest accrued over time.
- Due date: The notice specifies the deadline by which you should take action to avoid additional penalties or interest.
- Payment options: Instructions on how to pay, set up a payment plan, or explore other solutions like an Offer in Compromise.
- Consequences of inaction: Potential enforcement actions, such as federal tax liens or passport denial, are clearly outlined.
What actions should you take?
Responding promptly to the IRS CP71C Notice is critical. Here’s what you can do:
- Pay the balance in full: If possible, pay the entire amount owed to stop further penalties and interest.
- Make a partial payment: Pay as much as you can immediately to reduce interest and penalties while exploring further options.
- Set up a payment plan: Use the IRS’s Online Payment Agreement Tool to create a manageable installment plan.
- Explore financial hardship options: If you cannot pay due to financial difficulties, you may qualify for temporary relief or an Offer in Compromise.
Pro Tip
If you cannot pay your tax balance immediately, pay as much as you can now. This reduces the total amount of interest and penalties you’ll incur over time.
What happens if you ignore the IRS CP71C notice?
Failing to respond to the CP71C Notice can have serious consequences:
- Accrued interest and penalties: The amount you owe will continue to grow, making it harder to settle.
- Federal tax lien: The IRS may file a lien against your property, which could damage your credit and complicate future financial transactions.
- Passport denial or revocation: Under the FAST Act, taxpayers with seriously delinquent tax debt risk having their passports revoked or renewal requests denied.
- Assignment to private collection agencies: The IRS may transfer your account to a private agency for collection.
- Legal enforcement actions: The IRS could escalate its collection efforts, potentially leading to wage garnishments or bank account levies.
Pro Tip
Keep detailed records of all payments and correspondence with the IRS. Proper documentation can simplify resolving disputes or discrepancies on your account.
Steps to resolve your IRS CP71C notice
1. Review the notice
Carefully read the notice to understand the total amount owed, the due date, and the options available to you. Compare the information with your tax records to ensure accuracy.
2. Pay what you can
Even if you cannot pay the full amount, making a partial payment reduces your debt and slows the accrual of interest and penalties. Use the payment instructions on the notice to ensure your account is credited correctly.
3. Set up an installment agreement
If full payment isn’t feasible, use the Online Payment Agreement Tool to arrange a payment plan that fits your budget. Ensure you comply with the terms of the agreement to avoid further enforcement actions.
4. Consider an Offer in Compromise
If you face significant financial hardship, an Offer in Compromise may allow you to settle your debt for less than the full amount owed. Use the IRS’s Pre-Qualifier Tool to check your eligibility and submit the required documentation to apply.
5. Seek professional assistance
Tax professionals or Low-Income Taxpayer Clinics (LITCs) can provide guidance and representation to help you address your tax issues. LITCs are particularly useful for low-income taxpayers or individuals with language barriers.
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Frequently asked questions
Why did you receive the IRS CP71C notice?
You received the IRS CP71C notice because you have an unpaid federal tax balance. The IRS sends this notice annually to remind taxpayers about their outstanding tax debts and to encourage immediate action. If the balance remains unresolved, penalties, interest, and other consequences may apply.
Can you negotiate your tax debt if you can’t pay in full?
Yes, the IRS offers options like an Offer in Compromise, which allows you to settle your tax debt for less than the full amount if paying it in full causes financial hardship. You can also set up a payment plan to pay your debt in installments. It’s important to act quickly to minimize penalties and interest.
What should you do if you believe the notice is incorrect?
If you think the CP71C notice is incorrect, you should contact the IRS using the toll-free number provided on the notice. Be prepared with documentation, such as payment records or other relevant information, to support your case. Resolving discrepancies promptly helps avoid additional interest or penalties.
What happens if you are unable to respond immediately?
If you are unable to address the notice right away, the IRS will continue to add interest and penalties to your balance. Prolonged inaction could result in a federal tax lien, wage garnishments, or other enforcement actions. If financial hardship prevents you from responding, you may qualify for temporary collection delays or other relief programs.
How can you avoid receiving future IRS CP71C notices?
To avoid future CP71C notices, ensure you pay your taxes on time and in full each year. If you face financial difficulties, communicate with the IRS early to arrange payment plans or explore relief options. Keeping your contact and financial information updated with the IRS can also help prevent delays or misunderstandings.
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 IRS CP71C Notice is a reminder of unpaid tax balances, penalties, and interest.
- Ignoring the notice can lead to serious consequences, including passport denial or federal tax liens.
- Respond promptly by paying the balance, setting up a payment plan, or exploring other relief options.
- Seek assistance from a tax professional or Low-Income Taxpayer Clinic if needed.
- Acting quickly minimizes penalties, interest, and potential enforcement actions.
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