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How IRS assortment notices work

Usually, CP14 is the primary IRS discover for an unpaid tax steadiness, adopted by three or 4 reminder letters, each 5 weeks, defined Darren Guillot, nationwide director at Alliantgroup, who beforehand served as IRS deputy commissioner of the company’s small enterprise division.

It is attainable many taxpayers solely obtained that first letter earlier than the IRS paused automated assortment notices, he mentioned.

Nonetheless, the company is waving roughly $1 billion in late-payment penalties for hundreds of thousands of taxpayers with balances underneath $100,000 from returns filed in 2020 and 2021. The reduction is automated, however late-payment penalties for unpaid balances from 2020 and 2021 will resume April 1, 2024.

How to answer IRS letter: ‘You may’t bury your head’

Whereas late-payment penalty reduction could also be welcome information for taxpayers with debt from 2020 or 2021, you continue to have to repay these balances.

“You can’t bury your head and pretend it’ll go away,” Guillot mentioned, emphasizing the significance of responding to assortment notices promptly to keep away from additional enforcement actions.

“The overwhelming majority of taxpayers can arrange a payment plan for themselves” by scanning a QR code on their IRS discover, he mentioned.

The overwhelming majority of taxpayers can arrange a fee plan for themselves.

Darren Guillot

Nationwide director at Alliantgroup

If you happen to owe $50,000 or much less, together with tax, penalties and curiosity, you may arrange a long-term payment plan online. You may also arrange a short-term fee plan, 180 days or much less, on-line for lower than $100,000 in mixed tax, penalties and curiosity.

“The online installment payment application is just fantastic,” mentioned Phyllis Jo Kubey, a New York-based enrolled agent and rapid previous president of the New York State Society of Enrolled Brokers. “I use that online installment agreement all the time for my clients.”

If you happen to select the month-to-month fee choice and choose a really small quantity, resembling $2, for instance, the system will default to the minimal month-to-month fee it’s going to settle for in your steadiness, she mentioned.

Kubey usually urges shoppers to contract for the minimal month-to-month fee after which pay additional if they’ll afford it. “It’s super convenient,” she added.