What To Do About the CP71D Notice
Summary:
The CP71D IRS Notice is sent to taxpayers to remind them of an unpaid balance on their tax account. It is crucial to act promptly when receiving this notice, as interest and penalties continue to accrue on the overdue amount. The CP71D Notice also informs taxpayers of the U.S. Department of State’s authority to deny or revoke a passport due to severely delinquent tax debt. Taxpayers are encouraged to pay the balance in full or establish a payment plan to avoid further financial and legal consequences.
Receiving an IRS notice in the mail can be nerve-racking, especially when it involves an unpaid tax balance. One such notice is the CP71D, which the IRS issues annually to inform taxpayers of their outstanding debts and the consequences of not addressing them. This notice also serves as a warning regarding potential passport restrictions due to severe tax delinquency.
In this article, we will break down what the CP71D Notice is, why you might receive it, the steps you need to take, and how you can address your tax debt effectively. By the end of this guide, you’ll have a clear plan of action to resolve your IRS debt and avoid further complications.
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What is the CP71D notice?
The CP71D IRS Notice is an annual reminder sent to taxpayers who have an unpaid balance on their tax account. The notice informs them about the remaining balance, how much they owe in penalties and interest, and the urgency of settling their debt. The IRS sends this notice to keep taxpayers aware of their delinquent status, encouraging them to take action before their debt grows further due to compounding interest and additional penalties.
Another key element of the CP71D Notice is its warning about passport restrictions. According to U.S. law, the IRS can notify the State Department if a taxpayer has seriously delinquent tax debt, which can result in the denial or revocation of a passport. This makes addressing the CP71D notice essential not just for your financial well-being, but also for maintaining your ability to travel internationally.
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 did I receive the CP71D notice?
You received the CP71D notice because the IRS has an unpaid balance on your tax account that remains unresolved. This balance could be from previous years’ taxes, penalties, or interest that has accumulated over time. Typically, the IRS sends this notice annually as a reminder that you still owe money and that action is required.
The notice serves as an annual update on the status of your tax debt, with the intention of urging you to either pay off the full amount or set up a payment plan to avoid further financial consequences.
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How does the CP71D notice affect you?
If you ignore the CP71D notice, your unpaid balance will continue to accrue interest and penalties, making your tax debt larger over time. Additionally, the IRS may escalate collection actions, such as placing a lien on your property or assigning your account to a private collection agency. These actions can affect your credit score and financial standing.
Moreover, if the IRS considers your debt “seriously delinquent” (which usually means the amount exceeds $54,000 and meets other criteria), your passport could be at risk. This means the U.S. Department of State may deny you a new passport or even revoke an existing one, severely limiting your ability to travel abroad.
What should you do when you receive the CP71D notice?
Receiving a CP71D notice is a sign that immediate action is needed. Here’s what you should do:
- Review the notice carefully. Ensure you understand the amount you owe, any penalties or interest applied, and what steps you need to take.
- If you’ve already arranged a payment plan or made a recent payment, check to see if the balance reflects those updates.
- Make a payment. Paying the full amount due as soon as possible will stop the accrual of interest and penalties. You can do this through the IRS’s online portal or by mailing a check along with the payment coupon included in your notice.
- Set up a payment plan if you cannot pay the full amount. You can apply for a payment plan through the IRS Online Payment Agreement Tool. This allows you to pay off your debt in monthly installments.
- Consider an offer in compromise if you are experiencing financial hardship. An offer in compromise allows you to settle your tax debt for less than the full amount owed, but you must meet certain eligibility criteria.
- Contact the IRS if you are unsure how to proceed or need further clarification. The toll-free number on your CP71D notice can connect you to an IRS representative for assistance.
Pro Tip
If you can’t pay your tax debt in full, setting up a payment plan early can prevent additional penalties and interest from piling up. The sooner you act, the better.
What if you can’t pay the full amount?
If you’re unable to pay the full amount mentioned in the CP71D notice, you still have options. Here’s what you can do:
Set up a payment plan
If you can’t pay the entire balance at once, the IRS allows you to set up a payment plan. You can apply online using the IRS Online Payment Agreement Tool or by mailing in Form 9465, Installment Agreement Request. Depending on your financial situation, you may qualify for a short-term payment plan (lasting up to 120 days) or a long-term installment plan (lasting beyond 120 days).
Consider an offer in compromise
An offer in compromise is an agreement between the IRS and a taxpayer that allows the taxpayer to settle their debt for less than the full amount owed. This option is generally available to individuals who cannot pay their full tax liability or where doing so would cause significant financial hardship. Use the IRS’s Offer in Compromise Pre-Qualifier Tool to see if you meet the eligibility criteria before applying.
What happens if you don’t respond?
Failing to respond to the CP71D notice can result in significant consequences:
- Additional penalties and interest may accrue on your outstanding balance, further increasing the amount you owe.
- The IRS may file a Notice of Federal Tax Lien, which alerts your creditors that the IRS has a legal claim to your property.
- Your account may be assigned to a private collection agency, which can lead to more aggressive collection efforts.
- The U.S. Department of State may deny or revoke your passport if your debt is considered seriously delinquent.
Pro Tip
Use the IRS Online Payment Agreement Tool to easily apply for a payment plan. It’s faster than mailing forms and gives you instant approval notifications.
How to avoid future tax issues
It’s important to avoid tax debt to prevent receiving notices like CP71D in the future. Here are some tips:
- Ensure your withholding or estimated tax payments are accurate to avoid underpayment penalties. You can adjust your withholding by submitting Form W-4 to your employer.
- File your taxes on time and pay any balance due promptly to avoid interest and penalties.
- Consider electronic filing, which is faster and can help you avoid mistakes that may lead to underpayment or penalties.
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Frequently asked questions
What should I do if I can’t afford to pay the full amount mentioned in the CP71D notice?
If you can’t afford to pay the full amount, you have several options. You can apply for a payment plan with the IRS, which allows you to pay your balance in monthly installments. Additionally, if you’re experiencing financial hardship, you might qualify for an offer in compromise, which could allow you to settle your debt for less than the full amount. The IRS’s Online Payment Agreement Tool and Offer in Compromise Pre-Qualifier Tool can help determine your eligibility.
How can I avoid receiving a CP71D notice in the future?
To avoid receiving future CP71D notices, it’s important to pay your taxes on time and in full. Ensure that your tax withholdings or estimated tax payments are accurate to avoid underpayment penalties. If you consistently owe at tax time, consider adjusting your withholding or making estimated tax payments throughout the year. Filing your taxes electronically can also help avoid mistakes that lead to underpayments.
Can I negotiate my tax debt with the IRS if I receive a CP71D notice?
Yes, the IRS offers negotiation options for taxpayers who cannot pay the full amount of their debt. You can apply for an offer in compromise, which allows you to settle for less than what you owe if you meet certain criteria. The IRS also offers installment plans for those who need to pay their debt over time. It’s important to act quickly, as delaying can result in further penalties and interest.
Will interest and penalties continue to accrue even if I set up a payment plan?
Yes, even if you set up a payment plan, interest and penalties will continue to accrue until your full tax balance is paid off. The longer the balance remains unpaid, the more interest and penalties will accumulate. However, setting up a payment plan prevents more severe collection actions, such as liens or wage garnishments.
What should I do if I believe the CP71D notice was sent to me in error?
If you believe the CP71D notice was sent in error, you should contact the IRS immediately to dispute the notice. Review your tax records to confirm whether you owe the balance listed in the notice. If you find that your account is up to date or you’ve already arranged a payment plan, you may need to provide the IRS with documentation to correct the issue. Use the contact information provided on the notice to resolve the error promptly.
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 CP71D notice is an annual reminder from the IRS about unpaid tax debt and the penalties that accrue over time.
- Unpaid tax balances may lead to interest, penalties, and potential passport restrictions if the debt is considered seriously delinquent.
- Taxpayers have options to pay off their debt, including payment plans and offers in compromise for those facing financial hardship.
- Ignoring the notice can result in significant financial and legal consequences, such as tax liens or being assigned to a private collection agency.
- Acting quickly and using the tools available from the IRS will help avoid further complications and additional penalties.
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