The IRS says I have a balance due.
A CP14 is usually the first bill for an unpaid balance. A CP501 and CP503 are reminders that it is still unpaid. None of them is a levy, but each one leaves less time before the IRS can take collection action.
Or book a 30-minute call about your situation and what to do next.
Talk to us about your IRS problemThis first phase is a fixed fee, set before work begins. Nothing in it obligates you to the next phase.
A notice and demand for payment.
Within 60 days after assessing a tax, the IRS must send each person liable a notice stating the amount and demanding payment. A CP14 is that notice. The 60 days is the IRS's deadline for sending it, not a deadline for you to pay; the date to pay by is printed on the notice.
CP14
States the amount owed, the tax year and the date to pay by.
Law · IRC §6303(a)CP501
A reminder that the balance is still unpaid and the IRS has not received payment or a response.
IRS practice · IRS CP501 guidanceCP503
A second reminder. The IRS says that if you don't pay, arrange a plan or call, it may file a Notice of Federal Tax Lien.
IRS practice · IRS CP503 guidanceDisagreeing
If you believe the balance is wrong, the notice gives a number to call. The IRS's Collection Appeals Program can also be requested before collection action is taken.
IRS practice · IRS CP501 and CP503 guidanceInterest and the late-payment penalty.
The balance on the notice grows each month it remains unpaid.
Interest
Interest runs on unpaid tax from the original due date until it is paid. The IRS says you are not charged further interest if you pay the full amount by the date on the notice.
Law · IRC §6601(a) · Notice-date rule: IRS practiceTax you reported
If the balance is tax shown on your return, the failure-to-pay penalty has generally been running since the payment due date, at 0.5 percent a month up to 25 percent.
Law · IRC §6651(a)(2)Tax the IRS added
If the balance is tax that was not shown on your return, the penalty generally applies if it isn't paid within 21 calendar days of the notice (10 business days if it is $100,000 or more).
Law · IRC §6651(a)(3)Reasonable cause
Both penalties do not apply where the failure was due to reasonable cause and not willful neglect.
Law · IRC §6651(a)Where the sequence leads.
If the balance isn't paid within 10 days after notice and demand, the law permits the IRS to collect it by levy, but only after giving written notice of its intent to levy at least 30 days in advance.Law · IRC §6331(a), (d)
In practice, that notice is the CP504, followed for most property by a final notice with the right to a Collection Due Process hearing, usually an LT11 or Letter 1058.IRS practice · IRS CP504 and LT11 guidance
A federal tax lien arises automatically when an assessed tax is not paid after notice and demand. The CP503 warning is about the IRS filing public notice of that lien.Law · IRC §6321; §6323(f)
The first notice is the best time to act.
At the CP14 stage the IRS has not yet sent the notice of intent to levy that the law requires before most levies, and the full range of options is usually still available. The right response depends on whether the balance is correct, whether other years are unfiled or unpaid, and what you can realistically pay. That is easier to settle before the CP504 than after it.Bridge's view · practitioner judgment
We take it from here.
- We take controlOnce you sign the authorization, we deal with the IRS for you. Send us any IRS letter you receive.
- Exactly where you standWhether the balance is right, and whether other years are open, from your IRS record.
- Your deadlines, risks and leverageThe date on the notice and what follows it.
- Your Resolution RoadmapIn writing: where you stand, what happens if nothing is done, and which paths are open to you.