IRS NOTICES: TAX DEBT

What is a CP501 notice?

Mark Steber Chief Tax Information Officer Published On June 22, 2020

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 Chief Tax Information Officer, responsible for key initiatives that support overall tax service delivery and quality assurance. Mark also serves as a Jackson Hewitt liaison with the Internal Revenue Service, states, and other government authorities. With over 30 years of tax experience and deep knowledge of the federal and state tax codes, Mark is widely referenced as an expert on consumer income tax issues, especially electronic-tax and data-protection issues.

View Mark's LinkedIn Profile Jackson Hewitt Editorial Policy

Owe back taxes? Jackson Hewitt^® can help.

Learn More

What Is an IRS Offer In Compromise

An Offer in Compromise —also known as an OIC— is an IRS program that allows taxpayers to settle their outstanding debts for a lower amount than currently owed. The IRS may reject the offer if it doesn’t meet their threshold for approval, leaving taxpayers no option but to file an appeal if they choose to pursue their case. In 2017, roughly 62,000 OIC’s were submitted to the IRS with only 25,000 cases being approved. This amounts to a rejection rate of nearly sixty percent and highlights the importance of approaching the OIC application with extensive care and planning. Any errors, miscalculations, or unclear information will slow down the application and possibly lead to a full rejection of the claim. To submit an OIC application, there are clear requirements that must first be met.

by Jo Willets | March 6, 2020

What is a CP88 notice?

IRS notices are letters sent to inform taxpayers of important tax information. Each one is different, but we can explain what the CP88 is about.

by Mark Steber | June 22, 2020

How to Pay Back Taxes You Owe to the IRS

If you’re getting letters from the IRS about your tax debt, you probably have a lot of questions about what to do next and how to handle paying the IRS. We have answers! Read on to learn more about your options and where you can turn for help when paying your back taxes.

by Mark Steber | August 22, 2019

Why Jackson Hewitt^®?

We’ll work hard for you

Our Tax Pros will answer your questions, provide tax tips, and help you get smarter about your money.

We know our stuff

Jackson Hewitt is a leader in the tax industry, having prepared millions of tax returns in more than 35 years.

We’ll make it easy

We’re committed to helping you, fast and efficiently. Taxes done how you want and when you want.

Owe back taxes? Jackson Hewitt® can help. Call 833-381-8672 now!