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IRS notices are letters sent to inform taxpayers of important tax information. Each one is different, but we can explain what the CP501 is about.
Understanding your CP501 notice
You have an unpaid balance on one of your tax accounts. A CP501 is usually the first notice sent and is a reminder of how much money you owe the IRS. The notice gives details on your due date, amount due, and various payment options. Be sure to make your payment by the due date to avoid penalties.
Type of Notice
Balance due reminder
Why you received the CP501 notice
You received a CP501 notice because you have a balance due on one of your tax accounts. This means you owe money to the IRS. This notice is a reminder, and you should pay your outstanding balance as quickly as possible to avoid late penalties.
Likely next steps
As always, read the notice carefully. Your notice will explain the due date, amount due, and provide payment options.
If you agree with the amount, follow the directions on the notice and pay the balance by the due date given. You will be charged interest until the amount is paid.
If you disagree with the IRS, you will need to contact the IRS to dispute the balance. The IRS contact information can be found on your CP501 notice. You may also contact the IRS to create a payment plan if needed. To learn more, visit the IRS page, Understanding Your CP501 Notice.
You can also contact a tax professional to learn more about your options.
CP501 Notice deadline
The deadline for this notice will be stated on the notice itself. Read the notice carefully.
If you miss the deadline
If you do not pay the balance by the deadline/due date, your interest will increase and you may receive additional penalties. The IRS could also file a Notice of Federal Tax Lien on your property at any time if you do not make a payment or set up a payment plan.
About the Author
Mark Steber is Senior Vice President and Chief Tax Information Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.