What to do when the notice of balance owing from the IRS arrives

Much has been made of the IRS suspending some of its compliance and collection notices in 2022. Specifically, the IRS announced that it would remove many reminder notices of balance owing until the ‘IRS is catching up on processing paper returns, correspondence, and other backlogged items.

But tax professionals and their clients shouldn’t be too comfortable. The IRS cannot suppress approximately 9 million notices that go out every year. These notices are the first in a series of collection notices. In IRS terms, this notice is called the CP14 Notice and Tax Demand.

The CP14 notice is required by law (Internal Revenue Code Section 6303) to be issued within 60 days of the tax assessment by the IRS. The bulk of CP14 notices appear in early June (for 2021 returns, that date was likely June 6, 2022), requesting payment within 21 days.

This notice and demand letter sets the stage for the IRS to enforce the collection. If the taxpayer does not respond to the CP14 notice with payment, the IRS may begin the process of collecting taxes by direct debit or by filing a Notice of Federal Tax Lien. Usually, the IRS will send out a series of reminder notices, called collection notice streams, to request payment before beginning forced collection.

What should you do if your client receives a CP14 notice?

First, don’t ignore it. It’s time to start planning with your client how to resolve the outstanding tax balance. There are five IRS options to consider, and they each have pros and cons. Your client’s situation will determine which option is best.

About Charles D. Goolsby

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