JERSEY CITY, N.J., June 6, 2022 – Despite the IRS pausing several notices and letters last year, many are still automatically issued to taxpayers and are standard to deal with, including CP14 notice, Balance Due for Unpaid Taxes, that millions of taxpayers will receive this month. The experts at Jackson Hewitt Tax Services® recommend taxpayers immediately open the notice to setup the required next steps. Not following the steps outlined in the notice can result in additional penalties and interest from the IRS.
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CP14 notices are required by law to be issued within 60 days after the IRS assesses the tax liability, notifying taxpayers they still owe the IRS money in unpaid taxes. Each CP14 notice clearly outlines what is owed, how to pay, and other basic information about the unpaid balance.
“It’s always a scary feeling receiving a letter or notice from the IRS in the mail, but these shouldn’t go unnoticed and ignored,” said Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “My biggest piece of advice is to make sure you read the letter and engage a trusted tax professional to help you out, as tax professionals can not only help you understand next steps but can potentially help reduce the amount owed or at least give you your options.”
If a taxpayer doesn’t pay what is owed by the due date in the notice, interest will accrue and penalties will be assessed back to the due date of the tax return. Furthermore, if left unpaid the IRS can proceed to collect what is owed by levy or by filing a Notice of Federal Tax lien. The IRS may send a series of reminder notices, called the collection notice stream, to ask for payment before starting enforced collection. Don’t wait for this process to happen since penalties are assessed monthly and interest is compounded daily making your bill grow fast.
There are several options for taxpayers who receive a CP14 notice, including:
- Pay the entire tax balance in full. The cost of not paying in full is the current interest rate (based on the federal interest rate and adjusted quarterly) plus a 0.5% failure to pay penalty each month on the tax balance. Roughly, that equates to 10% added cost annually if the taxpayer doesn’t pay (5% interest rate as of 7/1/2022, plus 12 months at 0.5%, or 11% in total).
- Get an extension to pay in full. For taxpayers who just need more time than what’s included on their CP14 notice, they can work with the IRS to get an extension to pay agreement with the IRS. The IRS allows a free extension to pay balance due up to 180 days. The IRS calls this a short-term payment agreement.
- Enter into a payment plan with the IRS. Despite a survey conducted by Jackson Hewitt in April 2022 through Dynata, that found that only 31% of people thought anyone could have a payment plan with the IRS, this is an option for most taxpayers and is the most common option for those who receive a CP14 notice. There is a fee to enter into a payment plan that varies based on financial status and monthly payment method.
- Other options for those in financial hardship. For taxpayers who cannot afford to pay in full immediately, with an extension, or from a payment plan, there are other options to consider, including temporary not collectible status or a tax settlement, called an Offer in Compromise.
“It’s never a good idea to ignore IRS notices and the sooner taxpayers work with a Jackson Hewitt Tax Pro the better because no one deserves dealing with the headache of more penalties and interest,” said Steber.
Visit jacksonhewitt.com for more information and to locate an office.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead and stands behind its work with its Maximum Refund Guarantee and Lifetime Accuracy Guarantee® (restrictions apply, see Jackson Hewitt’s website for more details). Jackson Hewitt has more than 5,500 franchise and company-owned locations nationwide, including nearly 3,000 in Walmart stores as well as online tax prep services, making it easy and convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040.
This Jackson Hewitt survey was conducted online by Dynata in April 2022, among 1,000 American adults aged 18 and older. Respondents to the survey were selected from those who volunteered to participate in online surveys. One thousand complete surveys were collected using the sample framework based on U.S. Census data for age, ethnicity, gender, region, and income.
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