Connecticut State Tax Offer In Compromise Overview

An offer of compromise is when the Connecticut (CT) Department of Revenue Services (DRS) agrees to let you pay off your back taxes for less than you owe. It's called an offer of compromise because you make an offer and the DRS compromises by letting you pay less than your bill. 

The DRS will only grant offers of compromise if it believes that you will never pay your tax bill in full or that your tax bill is incorrect. The first is called doubt of collectibility, while the latter is doubt as to liability. Although harder to obtain, the DRS will consider an Offer (or an informal closing agreement) on trust-fund taxes such as sales & use or withholding. In these cases, the agency also reviews the financial situation of any person responsible (owners/officers) before agreeing to compromise.^[a]

For other taxes, obtaining an offer of compromise is not impossible, but it's difficult, especially without professional tax help. Here's an overview of the process.

How to Apply for an Offer of Compromise in Connecticut

If you agree with the tax amount owed, you can apply for an offer of compromise in CT by filing Form CT-656a (Offer in Compromise). The form requires the following details:

• Name
• Address
• Date of birth
• CT tax registration number
• Social Security Number
• Number of dependents claimed on your federal income tax return
• Tax type that you owe
• Period the tax is from
• Whether or not the tax bill is under appeal
• The amount you are offering to pay. 

You also must make a full financial disclosure on your application. This includes all your bank accounts, real estate, and other assets, as well as your loans, credit cards, and other debts. Then, you note your monthly income, including wages, business profits, rental income, child support and alimony, and any other income. Finally, you list your monthly expenses such as rent/mortgage, utilities, transportation, debt payments, groceries, child support and alimony, and other expenses.

You also need to attach the following:

• Your last two federal income tax returns with all supporting schedules and supporting forms such as W-2s and 1099s.
• A current copy of your consumer credit report.
• Last two pay stubs from your employer.
• A copy of the discharge notice if you filed for bankruptcy in the last five years.

Once you have all the materials together, you can mail your application to the Collections & A/R Management Division of the DRS. 

How to Apply for an Offer of Compromise on Business Taxes

Businesses can apply for an offer of compromise using Form CT-656, and they must provide the following supporting documents:

• Last two federal income tax returns for the corporation and corporate officers, the owner, or the partnership and partners
• All supporting schedules and forms such as 1099s or W-2
• Copy of current consumer credit report for owner, partners, or corporate officers
• Info on salary, draws, and loans to the proprietor, partners, or corporate officers
• Business's profit-and-loss statements for the last two years

Offer of Compromise When There Is Doubt as to Liability

If you disagree with the amount owed and you want to apply for an offer of compromise, you also need to file Form CT-656a, but there are different rules and a slightly different process.

To qualify for an offer of compromise based on doubt as to liability, there must be a genuine doubt that the tax bill is correct, and you can only use this reason to apply for an offer in compromise if the liability comes from a tax assessed by an audit assessment. You can't use this option if the tax bill is based on the information you put on your own return.

Additionally, you cannot apply for an offer of compromise due to doubt as to liability if any of the following apply:

• A notice of assessment was issued, but you didn't protest it in a timely manner
• You protested the assessment and received a final determination letter upholding the assessment, but you didn't appeal to the Superior Court in a timely manner.
• You appealed to the Superior Court, but the court of last resort has upheld the final determination letter.

If you have appealed but haven't received a final determination letter, you should send Form CT-656a, your supporting documents, and any additional information to the Director of the Appellate Division.

If you have already received your final determination letter but haven't appealed to the Superior Court, you should send your offer of compromise application to the Director of the Legal Division. If you have already appealed to the Superior Court, you can send your offer to the General Counsel. 

The DRS will send you a letter of receipt when it receives your application, and after they make a decision, it is final. You cannot appeal a rejected offer to the Superior Court. 

Requirements for Offer of Compromise in CT

In addition to convincing the DRS that the full balance is unlikely to be collected within the 10-year collection window, that the liability isn't really yours, or a mixture of both, you have to meet additional criteria to qualify for an offer of compromise in CT. In particular, if any of the following apply, the DRS won't consider your offer:

• You have unfiled CT state tax returns.
• You have filed for bankruptcy.
• You are in the midst of an involuntary bankruptcy due to someone else's actions.
• The State of Connecticut is criminally prosecuting you for unpaid taxes.
• Your tax bill has not been formally assessed.
• The audit assessment on your tax bill is final.

Negotiating an Offer of Compromise

Negotiating an offer of compromise with the CT DRS is challenging and often impossible, and for best results, you should work with a tax professional experienced with this agency. In fact, setting up offers of compromise in CT tends to be more difficult than obtaining offers in compromise from the IRS.

The IRS has a 10-year statute of limitations on collection, and Connecticut now follows a similar 10-year limit^[b]. Older liabilities can therefore give you leverage with the DRS, but the agency still applies a more subjective analysis than the IRS.

In one case, the DRS maintained the collectability of liabilities that were 20+ years old and had been previously discharged in a Chapter 7 bankruptcy case. Although the taxes had been discharged, the lien from those liabilities survived the bankruptcy and was attached to real property owned by the taxpayer. 

The DRS was unlikely to foreclose on the liens, and it hadn't taken any meaningful collection activity on these liabilities in over ten years, but the DRS declined to settle at that time, indicating it would revisit the issue if the property were eventually sold.

Practitioners report an unofficial "floor" on what percentage of tax the DRS insists be paid—often 40-50%—regardless of formal ability-to-pay calculations. Compare the likely savings from a formal OIC versus an informal settlement before committing to the longer process.

CT Offer of Compromise Vs. IRS Offer in Compromise

The basic principle of an offer of compromise is the same with both the IRS and the CT DRS, but these agencies have vastly different rules and processes. 

If you apply for an offer in compromise with the IRS, you must make a 20% downpayment with your offer and pay off the rest of the offer within five months of acceptance. Or, you can request to pay off the settlement in 24 months and include the first proposed payment with your application. 

The CT DRS doesn't require you to submit a downpayment with your offer of compromise application but you must pay the whole settlement within 30 days if your offer is accepted.

These agencies also use different processes to assess the collectability of your tax liability. The IRS subtracts your available equity from your tax balance. Then, it calculates your ability to make monthly payments based on standard budget allowances and multiplies that amount by the number of months left before the collection statute expires. 

Here's a very basic example of that process. Imagine someone owes $10,000, and they have $3,000 in available equity. The IRS believes they can afford to pay $100 per month, and the collection statute expires in 12 months. In this case, the IRS can see that it will only be able to collect $4,200. That is $3,000 plus $100 x 12 months. 

Connecticut does not publish a fixed mathematical formula for settlement amounts. Examiners weigh your assets, income, and how much time remains on the 10-year collection clock on a case-by-case basis.

Negotiating an Offer With Both the IRS and CT DRS

If you want to settle your state and federal taxes, a strategic approach can help you negotiate the best deal possible. 

The DRS doesn't require a downpayment, making it easier to apply, and this agency tends to review offers faster than the IRS. However, if your offer is accepted, you need to be able to access the funds quickly. If you're taking a loan against property, for example, you may want to secure the funds before you submit your offer. 

The IRS takes into account your arrangements to pay state tax liabilities, and if the state has accepted your offer, the IRS won't consider those funds as available equity when reviewing the offer on your federal tax liability. However, the IRS provides a monthly allowance for state and local tax liabilities, and if you've already made arrangements with the state, the IRS may not make this concession.

Ultimately, you need to consider the viability of each offer you make in the context of the other offer being accepted and paid first. 

Informal Offers of Compromise

In the past, the DRS has accepted informal settlements called "closing agreements" on old tax bills. Usually negotiated by phone, these arrangements involved the taxpayer paying 100% of the tax plus roughly 50% of the accrued interest^[c] on their account in exchange for abatement of the remaining interest and all penalties. Penalty abatement is common but remains discretionary.

This informal process saved taxpayers money while also allowing them to avoid the offer-of-compromise application process. Still, the DRS seems to be moving away from these practices and requiring taxpayers to formally apply for an offer of compromise.

According to Tax Attorney Robert Lyon, "The DRS will still entertain informal settlements, though in recent history it's required the taxpayers agreeing to pay the tax, plus 50% of the interest. It's not a sure thing, but in most instances, they'll agree to that without too much pushback."

Get Help Requesting an Offer of Compromise in Connecticut

Applying for an offer of compromise is a complicated process. For the best results, you should work with a tax professional. They can help you craft your offer of compromise and work with you to find other solutions to your CT tax issues. Contact a tax professional such as Robert Lyon, who has years of experience dealing with the CT DRS. 

---

1. [a] Based on practitioner experience and DRS practice; trust-fund assessments may also be issued personally against responsible individuals.
2. [b] Conn. Gen. Stat. § 12-35(k) (as amended by Pub. Act 22-117 § 31): 10-year limit on collection; remaining balance deemed abated on the first day of the 11th year.
3. [c] Recent DRS closing-agreement letters (2023 – 2025) and practitioner interviews; typical terms are tax + 50% interest, full penalty waiver.

Disclaimer:  The content on this website is for educational purposes only. It does not serve as legal or tax advice. For specific help regarding your tax situation, contact a licensed tax professional or tax attorney.

Mississippi State Offer in Compromise Overview

The Mississippi DOR, like the IRS, offers an Offer in Compromise (OIC) option. An Offer in Compromise is an agreement between the Mississippi DOR and the taxpayer to pay less than the total amount in taxes owed. The taxpayer should offer an amount that is in their best interests and the state. The offer should be in line with what the DOR deems to be the taxpayer’s ability to pay. Consequently, it is the Commissioner of Revenue that makes the recommendation as to whether to accept an amount less than the taxpayer owes. Both self-employed individuals, non-self-employed individuals, and entities can apply for an Offer in Compromise, and the state provides guidelines and separate applications for each. 

Offer in Compromise Eligibility Details and More

Before a taxpayer applies for an Offer in Compromise, it is essential to understand the eligibility requirements and guidelines provided by the DOR. Remember, if the Commissioner determines if the offer amount is not in the best interests of the state, then it will not be accepted. The offer amount has to be based on the taxpayer’s ability to pay. The taxpayer should not apply for an OIC to stall collection activities as the DOR will not suspend collection activities once the taxpayer files an OIC nor will the state release tax liens. In fact, interest will continue to accrue.

The Mississippi DOR provides instructions and applications specific to individuals (not self-employed), self-employed individuals, and entities. The guidelines vary slightly by the type of taxpayer applying for a Mississippi Offer in Compromise. Below we have provided guidance for individuals who are not self-employed. 

Eligibility Requirements

Here are some of the eligibility details the Mississippi DOR provides:

• The taxpayer must file all tax returns due and continue to file on time. Moreover, the taxpayer must pay all future tax liabilities. 
• The taxpayer cannot have an open bankruptcy proceeding
• Taxpayers must illustrate that they cannot pay their tax liabilities through a payment plan (installment agreement) or through equity in assets. 
• The taxpayer’s tax liability must be at least 4 years or older and $3,000 or more. In other words, the state must have first tried to collect on the past-due tax liability so recent tax liabilities generally won’t be considered.
• If you or your business has Trust Fund Tax liabilities, the DOR will not consider the offer. Trust fund taxes include sales taxes and income taxes withheld on behalf of employees
• If the taxpayer accrued the tax liabilities from criminal activity, the DOR will reject the offer
• The offer may be rejected by the DOR if the taxpayer has a history of willful noncompliance with MS state tax laws
• The DOR will reject a taxpayer’s offer that does not provide sufficient financial documentation to support income, expenses, liabilities, and assets. 
• Taxpayers with a previous OIC for another tax liability cannot submit another offer
• Complete the OIC application in full, the Commissioner may disregard incomplete applications

The Offer Amount

Generally, the minimum offer is equal to monthly disposable income multiplied by 12 and adding in the market value of non-necessary assets (market value of assets minus any liabilities associated with the assets). Non-necessary assets would include those assets generally exempt in a bankruptcy. The DOR determines monthly disposable income by subtracting monthly allowable expenses (necessary expenses) from monthly income. Some assets are not included in the calculation, such as Homestead up to $75,000 in equity, $10,000 of equity per vehicle per taxpayer, and personal property of up to $10,000. The MS DOR does provide worksheets to help taxpayers determine the offer amount. 

Guidelines and Instructions

The MS DOR does provide guidance and instruction when filing for an Offer in Compromise. Individual taxpayers who are not self-employed must complete the application by completing all lines and if a question does not apply to write “n/a” or zero on the line. If the taxpayer is also submitting an OIC with the IRS, the DOR may accept a 433 (Federal) form instead. The taxpayer must include additional sheets of paper if there is not enough space to properly answer a question. The taxpayer must pay $100 or 20% of the offer amount (whichever is greater) with the application. The payment will go towards the tax liabilities regardless of whether the DOR accepts the Offer. Once complete the taxpayer can mail the application to:

• Mail the completed application to the address below: 
  • Office of Tax Enforcement
  • P.O Box 2338
  • Jackson, MS 39225

Also to note, the taxpayer must sign a waiver eliminating the confidentiality provisions of the Mississippi tax code. Because of the complexity of filing an offer in compromise, it is recommended you reach out to a licensed tax professional with experience in filing MS state offers in compromise. Go here to start your search today.

Process and Decisions

The Commissioner will conduct a thorough examination to ensure that you accurately detailed your financial situation and claimed only necessary allowable expenses. 

The DOR will send the taxpayer a letter as to whether their offer was accepted. If accepted, the DOR letter acceptance letter will indicate the due date for the payment. However, once the taxpayer makes the payment, the DOR generally will release any related tax liens. If the Commissioner denies recommending the Offer to the governor, the taxpayer usually cannot appeal. According to Joseph Damiens, a tax attorney based in Mississippi, "Taxpayers should be very careful when filing an OIC with the Mississippi Department of Revenue, if you're denied on the initial offer, in most cases, the DOR will not entertain another offer for that taxpayer."

Recommendation

Due to the complexity of filing an Offer in Compromise with the state of Mississippi, it is highly recommended you reach out to a licensed tax professional such as a tax attorney, CPA, or EA who has experience with this type of resolution. You can find a list of tax professionals on TaxCure by visiting this link today.

IRS Notice CP14IA (Installment Agreement (IA) Accounts)

CP14IA is a notice that the IRS started using in January 2021. The agency sends this notice to taxpayers who have established or applied for payment plans, and this notice has replaced the standard CP14 notice in these situations.

Why Did the IRS Create CP14IA?

CP14 is a balance due notice, and CP14IA is a balance due notice for taxpayers with installment agreements. The IRS created the CP14IA notice to reduce confusion for taxpayers. 

What to Do If You Receive Notice CP14IA

Your CP14IA notice should note how much you owe the IRS, it should outline the terms of your payment agreement, and it should tell you if you need to take additional steps to complete your payment plan agreement. Here is what you need to do if you receive this notice:

• Make payments on your payment plan as outlined in your installment agreement.
• Note that if you don't make payments on time, your agreement may be canceled.
• Consider setting up automatic payment withdrawal so you don't miss any payments.
• Continue to file all tax returns when due — the IRS can cancel your payment agreement if you don't file your returns.
• Pay all new tax liabilities you incur — the IRS can also cancel your payment plan if you don't pay new tax liabilities.
• Provide the IRS with any information requested in notice CP14IA.

The IRS often sends notice CP14IA when you need to complete additional paperwork to set up your installment agreement. Make sure that you submit this paperwork by the deadline noted on the letter. Otherwise, you risk losing your payment arrangement. 

What Forms Do I Need to Complete My IRS Payment Plan Agreement?

Notice CP14IA will tell you if you need to submit additional paperwork to complete your installment agreement. This notice often contains a request to file missing tax returns or complete Form 433-F (Collection Information Statement). 

As indicated above, you need to stay on top of your current tax filing deadlines if you want to get your payment plan approved. Missing filing obligations can also cause existing payment plans to go into default. If CP14IA says you need to file missing returns, contact a tax professional and get those returns submitted as soon as possible. 

If CP14IA requests Form 433-F, you should also submit that form as soon as you can. Form 433-F requests information about your bank accounts, lines of credit, credit card debt, investments, real estate, and other assets. It also asks about your income and monthly bills. The IRS uses this information to decide whether or not to approve your payment plan.

Frequently Asked Questions About IRS Installment Agreements

Taxpayers usually only receive notice CP14IA if they have established or applied for a payment plan. If you received notice CP14IA, you may have questions about your installment agreement. Here are answers to some of the most frequently asked questions we hear about installment agreements:

How do I find out how much I owe on my IRS payment plan?

Notice CP14IA should show how much you owe. Alternatively, you can set up an online account with the IRS to check the total amount of your tax liability.

How much are my IRS installment plan payments?

The IRS has an online payment agreement application, and when you create an account, you can check your balance and the number of your payments. 

Can I change my payment plan?

You can also make changes to your payment plan using the IRS's online payment agreement tool. You can request to change your monthly payments, your payment due date, or the account you use for direct debit. If you have defaulted on a payment agreement, you can also use the online application to try to reinstate your agreement. 

What if I can't afford to make payments on my IRS installment agreement?

If your financial situation has changed and you can no longer afford to make payments on your account, you can apply for hardship status. To obtain hardship status, you need to provide the IRs with detailed information about your financial situation that shows you cannot afford to pay. 

Hardship status does not erase your tax liability. It just temporarily stops collection activity on your account. Try to make your payments as scheduled until your hardship status has been approved. 

What if the information on notice CP14IA is wrong?

If the information on the CP14IA is incorrect, you should start an appeal with the IRS. If you believe the incorrect information is due to identity theft, you should contact the agency directly. You should also take other steps to secure your identity, such as contacting the credit bureaus to lock your credit.

Why is interest accruing on my tax balance?

Even if you have a payment plan, interest and penalties will continue to accrue on your account. However, the interest and penalties assessed on tax liabilities that are being paid through an installment agreement are typically less than the interest and penalties you will face if you are just ignoring your tax liability.

If you have additional questions about CP14IA or your IRS payment plan, consider reaching out to a tax professional. They can answer your questions and help you deal with the IRS.

What Does the QR Code on Notice CP14IA Do?

In 2021, the IRS began adding QR codes to notice CP14IA as well as other notices. The QR codes will open part of the IRS's website when you scan them with the camera of a smartphone. Your letter should tell you which part of the IRS's website is linked to each QR code.

Get Help Dealing With CP14IA

Dealing with the IRS can be confusing, and taxpayers who navigate the situation on their own often end up paying more tax liability than they should. If you have received CP14IA or if you have other concerns, reach out to a tax professional today.

At TaxCure, we help people find the best tax professional for their unique situations. You can look at tax pro's experience and read reviews from previous clients. Let us help you find a tax professional today. 

What Does IRS Notice LT17 Mean?

The IRS sends many different letters and notices to taxpayers, and if you owe federal income tax, you may receive notice LT17 (Please Take Action on your Balance Due Using Our Online Services). This guide explains what to do if you receive LT17 and what happens if you ignore this notice.

What Is IRS Notice LT17?

IRS Notice LT17 is the IRS's request to use online services to take action on your unpaid tax balance. This letter outlines the different options you can use to take care of your tax liability, and it provides links and QR codes to help you navigate the IRS website. Here is an example below: 

What Should You Do If You Receive LT17?

If you receive LT17, you should make arrangements to deal with your tax liability as soon as possible. Here are your main options:

• Pay your balance in full 
• Set up a payment plan to pay your balance in installments
• Request an offer in compromise to settle your balance for less than you owe
• Apply for relief from penalties
• Obtain hardship status if you cannot afford to pay your tax liability
• Appeal incorrect tax assessments

Failure to deal with your unpaid taxes can cause the IRS to take action on your account. The agency has a lot of recourse for collecting taxes, and if you want to minimize the effect on your finances, you should always reach out to the IRS before its agents start collection activities on your account.

What Happens If You Ignore LT17?

If you ignore notice LT17, the IRS may enforce collection activities on your account. In other words, if you don't pay, the IRS will find a way to force you to pay your tax bill, and collection activities can include the following:

• Garnishing your wages
• Placing liens on your property
• Seizing the funds in your bank account
• Claiming your assets
• Taking your passport

The IRS also has the right to take state and federal tax refunds. Keep in mind that this agency has more rights than most private creditors — even declaring bankruptcy does not have the power to eliminate all of your tax liabilities. 

What If You Received LT17 But You Already Paid Your Tax Bill?

The IRS only sends LT17 to people who owe a tax bill, and if you have already paid your tax bill, you are either receiving this notice in error or the IRS hasn't received your payment yet.

Keep in mind that payments can take up to 21 days to process. If you paid your entire balance in the last 21 days, disregard this notice. If you paid over 21 days ago, contact the IRS to make sure the agency received your payment. You can set up an online account to check your balances and see what payments have been received or credited.

What If You Receive LT17 But Already Have a Payment Plan?

If you have already set up a payment installment plan, continue to make payments as outlined in your plan. If you have recently requested a payment plan that has not been approved yet, try to make payments on your account as you wait for your plan to be approved. 

What If You Can't Afford to Pay the Bill on LT17?

If you cannot afford to pay the balance shown on your LT17 notice, you have a few different options. The IRS has an offer-in-compromise program where qualifying taxpayers can settle their balance for less than the amount owed. With an offer-in-compromise, you either pay off the settlement in a single lump sum or in installments over a short period of time. 

Some taxpayers can qualify for currently uncollectible status on their accounts. If you can demonstrate severe financial hardship, the IRS will stop collection activity on your account. But you need to keep the agency updated on your status, and you will be expected to pay off your balance if your financial situation changes.

Qualifying for either of these options can be challenging, and you must provide the IRS with extensive details about your financial situation including your income, assets, and debts.

Why Are There Extra Costs on LT17?

You may notice that the tax due on LT17 is different from the amount shown when you originally filed your return. This can happen for several different reasons. If the IRS adjusted your tax bill, you should have been notified in a different notice. 

All tax balances also incur penalties and interest. The only way to stop penalties and interest from accruing is to pay your balance in full. However, if you set up a payment plan, the IRS will reduce the rate of your interest and penalties.

Why Is There a QR Code on LT17?

In 2021, the IRS began placing QR codes on many of its notices, including the LT17. The QR codes are designed to help taxpayers, and when you scan them with your phone, they direct you to a relevant section of the agency's website.

Dealing With IRS Notice LT17

Dealing with the IRS can be scary, confusing, and time-consuming. The agency has a lot of power and its processes are often very complex. Luckily, you don't have to deal with the IRS on your own. You can get help from a tax professional who understands how to reduce balances, set up payment plans, apply for hardship status, appeal incorrect information, and more. 

Don't let the IRS make your life uncomfortable. Instead, get high-quality help for your tax problems today. To get help dealing with notice LT17, contact a tax professional today. 

 

IRS Notice LT16: What It Means and What to Do

IRS Notice LT16 is a reminder that you owe taxes and/or have unfiled returns. This notice says that the IRS has assigned your account for review and possible enforcement activity. This letter comes from the IRS's Automated Collection System ACS, and it often comes right before the IRS assigns your case to a revenue officer. To avoid additional penalties and collection actions, make arrangements on your tax debt, file unfiled returns, or let the IRS know that you don't have to file.  To get help now, use TaxCure to find a tax professional who can help you deal with your tax debt or other IRS problems.

Key takeaways

• LT16 – you have unpaid taxes or unfiled returns.
• When it comes – it's never the first collection notice. It may come several months or even years after you incur tax debt or fail to file a tax return.
• What to expect – if you don't make payment arrangements, the IRS will send additional notices and may start involuntary collections against you.
• How to respond – contact the IRS to make payment arrangements or contact a tax attorney for help. 
• What if you disagree – contact the IRS if you disagree with the balance due, penalties, or other aspects of the notice. Consider reaching out to a tax pro for representation.

What to Do If You Receive IRS LT16

The LT16 notice explains why the agency is contacting you and outlines your options. If you have unfiled returns, you should file them or explain to the IRS why you don't need to file for those years. If you have unpaid taxes, consider the following options:

• Pay your unpaid tax balance in full
• Set up a payment plan with the IRS
• Apply for a hardship status if you cannot afford to pay your bill

You don't have to deal with the IRS on your own. A tax resolution specialist can help you determine the best steps to take, and they can guide you through the process. 

What Does "Assigned Your Account for Review and Possible Enforcement Actions" Mean?

The LT16 often contains language like "we have assigned your account for review and possible enforcement actions". This generally means that your account was in the automated system, but it has been flagged for a manual review. This typically means that an IRS employee is going to look over your tax account. Then, they can recommend enforcement actions that may include demands for payment, wage garnishment, asset levies, or even a request for a face-to-face meeting. Again, however, before taking very serious collection actions, the agency will send you an additional notice. 

What If You Don't Agree With IRS Notice LT16

There are many situations where you may have received LT16 in error. Here are some of the most common questions we hear from people who have received LT16 in error, along with brief tips on what to do if you disagree with this notice or its details.

• Already filed your tax return – if you submitted your return in the last few weeks, check your online account to see if it's been received. If it's been more than 10 weeks, you should file a new return.
• Don't need to file a return – If you didn't have a filing requirement for the year in question, reach out to the IRS to explain that you didn't need to file.
• Already paid in full – if you paid less than 21 days ago, the IRS says to ignore this notice. Otherwise, check your IRS account and your bank account to make sure that the payment has been processed and applied to your tax bill.
• Already have a payment plan – double-check that the installment agreement is still active, and then continue making monthly payments as usual.
• Tax due is incorrect – you typically don't have appeal rights at this point for the tax due shown on the balance, but a tax pro can talk over options with you, such as an offer in compromise based on doubt as to liability. However, if the tax due is incorrect due to actions taken by your spouse (without your knowledge) or due to identity theft, then you should explore the points below.

What if I'm the victim of tax identity theft?

If you believe that you received LT16 due to identity theft, you should call the number noted on the form. You may also need to file Form 14039 (Identity Theft Affidavit) and take additional steps to protect yourself, such as freezing your credit. 

What if my spouse is responsible for the tax on LT16?

When spouses file a tax return together, they share the responsibility for the tax balance, but there are a few exceptions to this rule. Namely, if your spouse underreported the income on your return and then the IRS adjusted the return, you may be able to qualify for innocent spouse relief. To get approved, you must establish that you didn't know about the understatement and had no reason to know. If approved, you will only be responsible for your portion of the tax bill.

What if my ex-spouse was ordered to pay this tax debt in a divorce?

Unfortunately, even if your ex-spouse was ordered to pay this tax debt in a divorce decree, you are still legally responsible for the tax debt. The IRS can go after your assets to collect the debt. 

What Happens if You Ignore IRS Notice LT16?

If you ignore LT16, penalties and interest will continue to accrue on your account, and your balance will grow. The IRS may also decide to move forward with additional collection actions, including assigning your account to a revenue officer, sending it to a private collection agency, or pursuing involuntary collections such as wage garnishment or asset seizure. If you file a tax return showing a refund, the IRS will seize your refund to cover your tax debt. If you have unfiled returns, the agency will hold onto your refund just in case you owe taxes from the years you haven't filed yet.

Is the IRS Going to Seize My Assets?

LT16 says that if you don't pay or make arrangements in 10 days, the IRS may start enforcement actions. At this point, the IRS can only issue federal tax liens, seize your state or federal tax refunds, or certify your tax debt to the State Department so that they revoke or deny your passport. Luckily, however, the agency must send an additional notice before taking assets. However, if you ignore LT16, you may soon get a Final Intent to Levy notice, and 30 days after sending that, the IRS can garnish wages, freeze bank accounts, and/or seize assets.

Why Is There a QR Code on LT16?

Recently, the IRS decided to redesign several of its notifications including LT16, and one of the design updates included adding a QR code. You can scan this code to get more information on your letter. The QR code should direct you to a relevant section of the IRS's website or to your personal tax account. 

Real Stories of Taxpayers Receive an LT16

On Reddit, one user posted about receiving an LT19 showing a tax debt of $19,000 and two years of unfiled returns. They explained that they had defaulted on an IRS payment plan, and they had not filed two years of returns after experiencing a significant drop in income. Other Reddit users chimed in and said that there was no need to panic over this notice, and they advised the original poster to file their unfiled returns and call the IRS about the balance. 

Here's the good news – with just a single phone call to the IRS, the poster was able to get a 30 day pause on collections. That gave them time to deal with the unfiled returns. Then, once they know exactly how much they owed in total, they could contact the IRS to requst an installment agreement or whatever other option makes the most sense in their situation. 

How to Deal With IRS Notice LT16

LT16 is a serious notice. The IRS is letting you know that it plans to enforce collection activities on your account, and these actions can include seizing the money in your bank account, garnishing your wages, keeping state tax refunds, placing liens on your assets, or taking your passport. Do not ignore notice LT16. Instead, reach out to a tax professional to help. 

At TaxCure, we have an extensive directory of tax resolution specialists who focus on all kinds of different tax issues, and our algorithms can help you find the best professional for your situation. Don't let the IRS start collection activities on your account — use TaxCure to find a tax specialist to help you today.

 

IRS Notice LT19 – Pay Your Outstanding Tax Returns

IRS notice LT19 (Please Act on Your Balance) is a demand for payment from the IRS. This notice is typically not the first notice most taxpayers receive if they owe taxes, and by the time you receive this notice, the IRS is getting serious about your tax liability. This guide explains what to expect if you receive IRS notice LT19. To get help now, use TaxCure to find an experienced tax pro who can help you find a personalized solution for your tax problems.

Key takeaways

• LT19 – reminder of your balance due and a demand for payment.
• When it comes – the IRS sends this notice to taxpayers with unpaid balances. It's usually not the first notice and may come after a variety of other collection notices.
• What to expect – if you ignore this notice, the IRS will add more interest and penalties to your account. The agency will send additional notices before garnishing wages or levying assets.
•  How to respond – contact the IRS or a tax pro to set up monthly payments, if you can't pay in full. Talk with a tax pro about relief options if you can't afford monthly payments.
• What if you disagree – if you haven't had a chance to dispute your tax liability, you can do so now. However, you don't always have appeal rights at this point. Contact a tax pro if you disagree with the details on this notice or want to learn more about your appeal rights.

What Is IRS Notice LT19?

IRS LT19 is a demand for payment – usually, the agency only sends this notice to people who owe less than $50,000. The notice shows you how much you owe, and on the second page, it breaks down your tax liability, interest, and penalties for each year that you have unpaid taxes. The newest version of this notice shows you how much you owe if you pay in full, and it also comes with a detachable payment stub that you can use to mail in your payment, as well as a QR code that will take you to the IRS's direct pay for full payment. Additionally, the notice may show you a monthly payment option with a QR code that you can scan to get to the part of the IRS website where you can request payments. 

What to Do If You Receive IRS LT19

Here are your options if you receive notice LT19 from the IRS:

• Pay in full
  • By mail – Detach the payment stub and mail the full payment.
  • Online – Pay your full balance on the IRS website or the EFTPS site.
• Request to have your penalties removed.
  • Note that if you request penalty abatement before you set up payments, additional penalties may accrue on your account. 
  • Consider seeking penalty abatement after you pay in full or set up a payment plan.
• Apply for a payment plan.
  • You can set up payments online if you owe less than $50,000 and can pay off the balance within 10 years.
  • If you need longer to pay, contact the IRS to request payments or apply through the mail using Form 9465.
• Request an offer-in-compromise and settle your tax bill for less than you owe.
• Prove that you are having financial hardship so the IRS stops collection actions on your account.
• Appeal the incorrect information on your return – note that appeal rights may be limited depending on whether or not you have already had a change to appeal the balance due.

Writing a check to pay your balance in full is the most straightforward option, but most people who receive LT19 don't have enough cash on hand to pay their balances in full. If you are in this situation, you are not alone, but unfortunately, setting up a payment plan or negotiating other arrangements with the IRS can be complicated. To get the best result in your situation, you should consider working with a tax professional.

Why You Shouldn't Ignore LT19

You should not ignore LT19. Failure to respond to this notice can cause the IRS to escalate collection activities on your account. The agency has a lot of power to collect tax liabilities, and collection activity may include seizing your assets, seizing the money in your bank account, garnishing your wages, issuing a federal tax lien, or even taking your passport. 

To give you a sense of the IRS's collection powers, consider that federal law only allows judgment creditors to garnish up to 25% of your disposable income. In contrast, the IRS uses its own guidelines to determine the wages it can garnish to cover tax liabilities. For example, as of 2025, the IRS can garnish all earnings over $680.78 per week for a single person with four dependents. For a married couple with a single dependent, the IRS can garnish everything over $675 per week. Removing a garnishment once it has been applied can be very difficult.

What If You Don't Agree With IRS Notice LT19

Don't agree with the information on your LT19? Then, you need to proactively reach out to the IRS to correct the information. Here are some of the common issues you may have with the information on this notice.

Already Paid Tax Bill Noted on LT19

If you have already paid the tax liability noted on LT19, the IRS may not have received your payment yet, or the payment may have been lost in transit. Typically, the IRS takes about 21 days to process payments — if you sent your payment in the last 21 days, you can simply wait to see if the agency credits your payment. 

Payments submitted over 21 days ago may have been lost. Contact your bank to see if the check you wrote to the IRS has been cashed. Alternatively, set up an online account to check if the IRS has received your payment or contact the agency directly using the information on the notice.

Incorrect Tax Liability Shown on LT19

The tax liability shown on LT19 will typically be more than the amount you owed when you filed your tax return. That is because the total amount shown includes penalties and interest. However, this notice usually explains which amounts are your original tax liability and which amounts are due to interest and penalties.

If the original tax liability shown on LT19 does not match your records, the IRS may have made a mistake, and you may need to appeal the information on this notice. A skilled tax professional can help you through the appeal process. 

Tax Noted on LT19 Is Spouse's Fault

The IRS considers both spouses jointly responsible for the information reported on their tax return when they file jointly, but there are exceptions to this rule. In rare cases, you may be able to qualify for innocent spouse relief. 

Already Set up Payment Plan for Tax on LT19

If you receive LT19 but you have already set up a payment plan, you should continue making payments on your account as outlined in your agreement. The IRS may have sent this notice before your payment plan officially started. 

If you have applied for a payment plan but it has not been approved yet, check to see if you submitted your application for a payment plan before the date the notice was issued. The IRS may have issued notice LT19 before it had a chance to review your payment plan application.

Tax Liability on LT19 Due to Identity Theft

In some cases, the tax liability shown on LT19 may be due to identity theft. In this situation, contact the IRS and let the agency know that you were the victim of identity theft. They will work you through the process of freezing your account.

If you disagree with other information on your LT19 notice, you should reach out to a tax professional. They can help you identify the best steps forward in your situation.

What Does the QR Code on LT19 Do?

In 2021, the IRS began adding QR codes to many of the notices it sends out, and these QR codes are designed to help taxpayers navigate their options more effectively. When you scan the QR code with your phone, part of the IRS website will open on your phone. Notice LT19 should tell you what links you can open with the QR codes on the letter. In many recent versions of the letter, there are two QR codes – one to pay in full and one to set up payments. 

What Are the Monthly Payments on LT19?

In many cases, these notice shows you how much the monthly payments will be if you spread out the balance over 72 months (that's six years of payments), but in some cases, the letter may use a longer time period such as 120 months or up to the collection expiration date. Look at the notice carefully to see if your suggested payments are based on a 72-month repayment term or a different period of time. 

Is It Hard to Set Up Payments?

No, in most cases, if you owe less than $50,000, it's relatively easy to set up payments. As long as you can pay off the balance within 10 years and you are up to date on your filing requirements, you can set up a payment plan easily online. However, if you have a history of default or are applying for a payment plan on over $10,000 in business taxes, the IRS will require you to set up direct debit payments from your bank account, and if you can't do that, you may need to provide a collection information statement before the IRS approves your payments. 

How to Deal With IRS Notice LT19

You should not ignore LT19. If you owe a tax liability to the IRS, you should reach out to the agency proactively. You will always get a better result if you contact the IRS, rather than waiting for the agency to contact you. 

We can help you find a tax professional who will guide you through working with the IRS. At TaxCure, we have an extensive directory of tax professionals who focus on different aspects of tax liability resolution. Let TaxCure help you find a tax professional today. 

TaxCure Ranking Factors

Our goal at TaxCure is to increase transparency and provide taxpayers with a list of tax professionals who best fit their needs based on our technology. There are many different tax types, problems, solutions, agencies, and taxpayer types. Each situation is unique and professionals specialize. For professionals to be considered in the rankings they need to have an active license as an attorney, certified public accountant, or an enrolled agent. Each professional's background is verified and checked that they have an active license. 

TaxCure shows rankings for professionals on content pages about various tax topics as well as rankings of tax professionals based upon taxpayer's searches.

Below are some of the factors that we take into account to show the most applicable tax professionals.

• Location to the taxpayer: While many tax pros can work remotely, we know that at times it is important to work with someone local.
• Agencies Selected by the Tax Professional: Each professional can select the agencies they have experience with. If they don't have experience with a particular agency, then they will not show in the results for that agency.
• Tax Problems and Solutions: Each professional selects the problems and solutions for each agency that they have experience in dealing with. Only the professionals that select the specific problems and solutions will show in filtered results.
• Reviews: Client reviews give extra assurance that a professional did a good job working for a client with resolving a particular problem for a specific agency. 
• Activity levels of professionals: Professionals that are not active in monitoring their account and responding to clients will be less likely to show in the results.
• Profile Completeness Score: The higher the profile completeness score, the more weight their profile will carry in the search results. Taxpayers are more likely to interact with professionals who complete more of their profile, so to give the best user experience, the technology puts more weight on these types of profiles. 
• Other factors –  We are always making tweaks and taking into account a variety of factors to ensure the most applicable tax professional is shown. 

Due to the devastating nature of the wildfires currently raging in California, the Internal Revenue Service (IRS) has extended most tax deadlines for people and businesses in affected areas to January 15, 2021. 

Who Qualifies for Tax Extensions in California?

To qualify for the tax deadline extension, you must live or run your business in an area designated as qualified for assistance by the Federal Emergency Management Agency (FEMA). As of October 20, 2020, this includes the following counties:

• Fresno 
• Los Angeles 
• Madera 
• Mendocino 
• San Bernardino 
• San Diego 
• Siskiyou

If your area is added to the list later, you receive the same extension. You can find an up-to-date list on the IRS website. 

You can also qualify for the deadline extension if you keep your records in one of these areas, even if you don't live or have a business there. People who are involved in disaster relief efforts may also qualify. But in these situations, the relief typically does not come automatically. Instead, if you fall into one of these special categories, you must let the IRS know that you qualify for the extension. 

Which Tax Deadlines Have Been Extended?

The IRS has extended deadlines for tax returns and payments due on or after September 4, 2020, and before January 15, 2021. This includes tax returns for the following entities:

• Individuals 
• Corporations
• Partnerships
• S-corps
• Tax-exempt organizations
• Estates
• Trusts

The extension also applies to estate, gift, or generation-skipping transfer tax returns as well as quarterly payroll and excise tax returns. Additionally, if you have an estimated income tax payment due on September 15, 2020, you don't have to pay until January. 

Individuals and businesses who planned to file their 2019 income tax return by October 15, 2020, also have until the January 15, 2021 deadline. Normally, the deadline to file these returns is April 15, but due to the coronavirus, the IRS extended this deadline to October 15. If you're in one of the areas affected by the California wildfires, you now get even more time. 

Similarly, tax-exempt organizations already had the deadline for their returns extended to November 16, 2020, due to the coronavirus, but that deadline has been moved to January as well. 

Can You Claim Casualty Losses?

If you are in one of these areas or another federally declared disaster area, you can claim disaster-related casualty losses on your federal income tax return for the year in which the disaster occurred or the prior year. Individuals can also deduct property losses that were not covered by insurance or other reimbursements. 

In other words, if you suffered casualty losses in 2020 due to these fires, you can claim those losses on your 2020 return or 2019 return. 

What If You Don't Live in One of These Areas?

This relief is for people in businesses in areas affected by the September fires in this state, and if you are in another part of California, you may qualify for relief from another program. 

In particular, people from Butte, Lake, Lassen, Monterey, Napa, San Mateo, Santa Clara, Santa Cruz, Solano, Sonoma, Trinity, Tulare, and Yolo counties get to move all due dates on or after August 14, 2020, to December 15, 2020. 

What Should You Do If You Get a Notice From the IRS?

If you get a notice from the IRS saying that your payment or return is late and you believe that you should qualify for the extended deadline, contact the IRS directly or reach out for professional tax help. People who qualify for this relief do not have to pay any late filing fees, late payment fees, penalties, or interest. 

CP14 Notice From the IRS? What it Means & What to Do

Notice CP14 is the first letter you’ll receive from the IRS when you have a balance due for unpaid taxes. The IRS has announced in May of 2023 that they plan on sending out approximately 5 to 8 million CP14 notices from the end of May 2023 to the beginning of June 2023. This notice is generally the start of the IRS collections process and acting sooner rather than later to resolve the issue can save you a lot of money in penalties, interest and the other hassles that come up with enforced IRS collections.

The CP14 will contain basic information about your unpaid taxes, including:

1. Tax year or period for which you owe.
2. The amount of taxes, penalties, and interest you owe.
3. Deadline for submitting payment.

You should respond by the deadline on the notice to avoid receiving more letters from the IRS or having your account sent to the IRS collections. 

Why You Are Receiving a CP14 Notice

You’ll receive a CP14 notice when you didn’t pay your taxes in full for a given tax year. In other words, when you owe money to the IRS, this is one of the notices the IRS sends. For example, you may have filed a tax return that had a balance due, but failed to submit payment in full. Once the IRS processes your tax return, they will send the CP14 notice asking for payment.

View this example CP14 notice to see what the notice looks like and the information it contains. You can also find more information on this notice by visiting irs.gov/cp14. 

If you have tried to set up an installment agreement, you may receive IRS Notice CP14IA. This new IRS notice replaces the traditional CP14 notice in certain situations. 

What to Do When You Receive a CP14 Notice

Review the notice carefully and decide whether you agree with the amount due. If you agree, you’ll need to determine which payment option works best for your situation.

Pay in Full

If you can afford to pay in full, you’ll minimize the penalties and interest the IRS will charge you. You’ll also avoid having your balance sent to collections.

To pay online, visit the IRS website. You can pay directly from your bank account without being charged any payment fees. You can also pay by debit or credit card for a fee.

To pay by mail using a check or money order, follow the instructions on the notice and include your Social Security Number, the tax year you owe, and the form number (i.e., 1040) on your payment.

Pay by Installment Agreement

If you need a little more time to pay off your tax debt, you can request a short-term payment plan of up to 120 days. If you need more time to pay, you can request a long-term installment agreement.

IRS installment agreements require you to make monthly payments until you pay off your balance. There are several installment agreements, including streamlined agreements, direct debit installment plans, and partial pay installment agreements.

Many taxpayers can apply for an installment agreement online using the IRS online payment agreement tool. You can also call the phone number on your CP14 notice to request one.

Penalties and interest will continue to accrue while you are on an IRS installment agreement. Your future tax refunds will also be taken and applied to your balance until you pay it in full.

Your Options If You Can’t Afford to Pay Your Balance

The IRS offers many options when you can't pay your taxes in full. The simplest way is through an installment agreement. If you can’t make the minimum monthly payment on an IRS installment agreement, you may be able to negotiate a lower monthly payment amount. You may also be able to receive a temporary collection hold (known as currently not collectible status), which doesn’t require you to make any monthly payments.

You can also submit an Offer in Compromise if you want to try to settle your taxes for less than what you owe. These options generally require you to submit detailed financial information to the IRS, and you may want to consult a tax professional for assistance.

What to Expect If You Don’t Respond to the CP14 Notice

If you don’t respond promptly to the CP14, the IRS will continue adding penalties and interest while progressing through its notice system. Each notice gets more serious and closer to enforcement.

IRS Notice Timeline if You Ignore CP14

Here’s a general sequence of IRS notices and actions if you don’t respond to your CP14:

Notice	What It Means	Potential IRS Action
CP14	Initial bill for unpaid taxes	No enforcement yet — pay or contact IRS
CP501	Reminder of balance due	Penalties and interest continue
CP503	Urgent unpaid tax notice	Further warnings, automated follow-up
CP504	Final notice of intent to levy	Threat of wage garnishment or bank levy
LT11 / Letter 1058	Final legal warning before levy	IRS can seize wages, bank accounts, or assets

You’ll receive several more notices if you don’t respond to the CP14 by the deadline. The following notice is the CP501, followed by the CP503 and CP504. It is important to note that penalties and interests are still adding up even though there may not be notices that have been followed. If you received a CP14 notice, it is important to take action because even though the IRS may not be hounding you with other notices, there are still additional balances that are accruing. 

Each notice contains similar information. Penalties and interest you owe will continue to increase with each notice. If you don’t respond to any of these notices, the IRS will send your account to the IRS collections department.

IRS collections can then take several steps to try to collect on a tax debt, such as:

1. Filing a Notice of Federal Tax Lien to create a public record of the IRS lien against your property.
2. Establishing a wage garnishment that seizes a portion of your paychecks until the IRS has collected your entire balance due.
3. A bank levy that takes money directly out of your bank account to pay your taxes.
4. A levy of your Social Security benefits.

You can avoid these collection actions by paying in full or using any of the alternative options discussed above.

Penalties from the CP14 Notice

The CP14 Notice should include a breakdown of the taxes, penalties, and interest you’ve been charged. There are several types of penalties that you may face if you don’t pay your tax bill on time.

The failure to pay penalty is the most common penalty. This penalty is charged at 0.5% of your unpaid balance each month that you fail to pay it in full.

The failure to file penalty is charged when you don’t file a tax return on time. This penalty is assessed at 5% of your unpaid balance each month until your return is filed.

The estimated tax penalty is charged when you failed to make quarterly estimated tax payments during the year. Estimated tax payments are required for self-employed taxpayers and those that don’t have enough tax withholdings taken out of their income.

In some cases, you can request that some penalties be removed from your account using first-time penalty abatement or penalty abatement for reasonable cause.

What to Do If You’ve Already Paid Your Balance

It takes the IRS some time to process your payment. If you’ve paid in the last 21 days prior to the date on your CP14 notice, you can disregard the notice. Your account information should be updated shortly and you shouldn’t receive any more bills for that tax period.

What to Do If You’ve Already Set Up a Payment Plan

IRS notices are sent by an automated system there may be delays whenever you submit new information. If you’ve recently set up a payment plan for the taxes mentioned in the CP14 notice, you should continue to follow the terms of your payment plan by sending monthly payments.

If you have an IRS payment plan and receive a CP14 notice for a new tax amount owed that’s not already included in your payment plan, you’ll need to make a revision to your installment agreement to include the new taxes owed. You may be able to do this online or by calling the phone number on your CP14 notice. Respond quickly to your CP14 notice to resolve your tax problems before they become worse. Contact an EA, CPA, or tax attorney to find out what the best options are for your situation.

Help with CP14 Notice & TaxCure

At TaxCure, our site is made up of tax resolution professionals from around the country that can help with a wide variety of tax problems. We have a unique algorithm that can help you find the best professional with specific experience to help you based on your unique problem. If you can't pay your tax debt off, you can start your search here by seeing the top professionals that can help with unpaid IRS tax problems. If you have state issues as well, you can filter further to find the pros with experience with the state agency as well. 

Our goal is to increase the transparency for people when looking for professional help by making it easier for taxpayers to find professionals with experience that meets the needs of their unique tax and financial situation.

CP14 Notice From the IRS? What it Means & What to Do

Notice CP14 is the first letter you’ll receive from the IRS when you have a balance due for unpaid taxes. The IRS has announced in May of 2023 that they plan on sending out approximately 5 to 8 million CP14 notices from the end of May 2023 to the beginning of June 2023. This notice is generally the start of the IRS collections process and acting sooner rather than later to resolve the issue can save you a lot of money in penalties, interest and the other hassles that come up with enforced IRS collections.

The CP14 will contain basic information about your unpaid taxes, including:

1. Tax year or period for which you owe.
2. The amount of taxes, penalties, and interest you owe.
3. Deadline for submitting payment.

You should respond by the deadline on the notice to avoid receiving more letters from the IRS or having your account sent to the IRS collections. 

Why You Are Receiving a CP14 Notice

You’ll receive a CP14 notice when you didn’t pay your taxes in full for a given tax year. In other words, when you owe money to the IRS, this is one of the notices the IRS sends. For example, you may have filed a tax return that had a balance due, but failed to submit payment in full. Once the IRS processes your tax return, they will send the CP14 notice asking for payment.

View this example CP14 notice to see what the notice looks like and the information it contains. You can also find more information on this notice by visiting irs.gov/cp14. 

If you have tried to set up an installment agreement, you may receive IRS Notice CP14IA. This new IRS notice replaces the traditional CP14 notice in certain situations. 

What to Do When You Receive a CP14 Notice

Review the notice carefully and decide whether you agree with the amount due. If you agree, you’ll need to determine which payment option works best for your situation.

Pay in Full

If you can afford to pay in full, you’ll minimize the penalties and interest the IRS will charge you. You’ll also avoid having your balance sent to collections.

To pay online, visit the IRS website. You can pay directly from your bank account without being charged any payment fees. You can also pay by debit or credit card for a fee.

To pay by mail using a check or money order, follow the instructions on the notice and include your Social Security Number, the tax year you owe, and the form number (i.e., 1040) on your payment.

Pay by Installment Agreement

If you need a little more time to pay off your tax debt, you can request a short-term payment plan of up to 120 days. If you need more time to pay, you can request a long-term installment agreement.

IRS installment agreements require you to make monthly payments until you pay off your balance. There are several installment agreements, including streamlined agreements, direct debit installment plans, and partial pay installment agreements.

Many taxpayers can apply for an installment agreement online using the IRS online payment agreement tool. You can also call the phone number on your CP14 notice to request one.

Penalties and interest will continue to accrue while you are on an IRS installment agreement. Your future tax refunds will also be taken and applied to your balance until you pay it in full.

Your Options If You Can’t Afford to Pay Your Balance

The IRS offers many options when you can't pay your taxes in full. The simplest way is through an installment agreement. If you can’t make the minimum monthly payment on an IRS installment agreement, you may be able to negotiate a lower monthly payment amount. You may also be able to receive a temporary collection hold (known as currently not collectible status), which doesn’t require you to make any monthly payments.

You can also submit an Offer in Compromise if you want to try to settle your taxes for less than what you owe. These options generally require you to submit detailed financial information to the IRS, and you may want to consult a tax professional for assistance.

What to Expect If You Don’t Respond to the CP14 Notice

If you don’t respond promptly to the CP14, the IRS will continue adding penalties and interest while progressing through its notice system. Each notice gets more serious and closer to enforcement.

IRS Notice Timeline if You Ignore CP14

Here’s a general sequence of IRS notices and actions if you don’t respond to your CP14:

Notice	What It Means	Potential IRS Action
CP14	Initial bill for unpaid taxes	No enforcement yet — pay or contact IRS
CP501	Reminder of balance due	Penalties and interest continue
CP503	Urgent unpaid tax notice	Further warnings, automated follow-up
CP504	Final notice of intent to levy	Threat of wage garnishment or bank levy
LT11 / Letter 1058	Final legal warning before levy	IRS can seize wages, bank accounts, or assets

You’ll receive several more notices if you don’t respond to the CP14 by the deadline. The following notice is the CP501, followed by the CP503 and CP504. It is important to note that penalties and interests are still adding up even though there may not be notices that have been followed. If you received a CP14 notice, it is important to take action because even though the IRS may not be hounding you with other notices, there are still additional balances that are accruing. 

Each notice contains similar information. Penalties and interest you owe will continue to increase with each notice. If you don’t respond to any of these notices, the IRS will send your account to the IRS collections department.

IRS collections can then take several steps to try to collect on a tax debt, such as:

1. Filing a Notice of Federal Tax Lien to create a public record of the IRS lien against your property.
2. Establishing a wage garnishment that seizes a portion of your paychecks until the IRS has collected your entire balance due.
3. A bank levy that takes money directly out of your bank account to pay your taxes.
4. A levy of your Social Security benefits.

You can avoid these collection actions by paying in full or using any of the alternative options discussed above.

Penalties from the CP14 Notice

The CP14 Notice should include a breakdown of the taxes, penalties, and interest you’ve been charged. There are several types of penalties that you may face if you don’t pay your tax bill on time.

The failure to pay penalty is the most common penalty. This penalty is charged at 0.5% of your unpaid balance each month that you fail to pay it in full.

The failure to file penalty is charged when you don’t file a tax return on time. This penalty is assessed at 5% of your unpaid balance each month until your return is filed.

The estimated tax penalty is charged when you failed to make quarterly estimated tax payments during the year. Estimated tax payments are required for self-employed taxpayers and those that don’t have enough tax withholdings taken out of their income.

In some cases, you can request that some penalties be removed from your account using first-time penalty abatement or penalty abatement for reasonable cause.

What to Do If You’ve Already Paid Your Balance

It takes the IRS some time to process your payment. If you’ve paid in the last 21 days prior to the date on your CP14 notice, you can disregard the notice. Your account information should be updated shortly and you shouldn’t receive any more bills for that tax period.

What to Do If You’ve Already Set Up a Payment Plan

IRS notices are sent by an automated system there may be delays whenever you submit new information. If you’ve recently set up a payment plan for the taxes mentioned in the CP14 notice, you should continue to follow the terms of your payment plan by sending monthly payments.

If you have an IRS payment plan and receive a CP14 notice for a new tax amount owed that’s not already included in your payment plan, you’ll need to make a revision to your installment agreement to include the new taxes owed. You may be able to do this online or by calling the phone number on your CP14 notice. Respond quickly to your CP14 notice to resolve your tax problems before they become worse. Contact an EA, CPA, or tax attorney to find out what the best options are for your situation.

Help with CP14 Notice & TaxCure

At TaxCure, our site is made up of tax resolution professionals from around the country that can help with a wide variety of tax problems. We have a unique algorithm that can help you find the best professional with specific experience to help you based on your unique problem. If you can't pay your tax debt off, you can start your search here by seeing the top professionals that can help with unpaid IRS tax problems. If you have state issues as well, you can filter further to find the pros with experience with the state agency as well. 

Our goal is to increase the transparency for people when looking for professional help by making it easier for taxpayers to find professionals with experience that meets the needs of their unique tax and financial situation.

A Review of New Mexico State Tax Payment Plans

New Mexican Taxpayers who owe the state taxes and can’t pay in full may want to consider a tax payment plan with the Taxation and Revenue Department (TRD). Taxpayers who set up a payment plan with the TRD can avoid enforced collection activities such as levies or seizures in most cases. However, if a business taxpayer defaults, TRD can seize business assets and close the business. If individual taxpayer defaults on a payment agreement, TRD can also seize assets including motor vehicles.

Coronavirus Relief

For personal income taxes, the TRD is giving taxpayers until April 15th, 2021 to pay any 2019 tax liabilities in full without penalties or interest. They do not need to set up a payment plan online.  Taxpayers only need to satisfy their balance by April 15th, 2021. They can achieve this by making payments online using their social security number or by mailing payments. For tax balances for years older than 2019, they can set up a payment plan online.

Two Types of Payment Plans Offered by the NM’s TRD

New Mexico’s TRD offers two types of payment plans for taxpayers that cannot pay off their tax balance in full.

Short-Term Payment Plan

A short-term payment plan is for taxpayers who need only 12 months or less to pay off the tax liability. The benefit of setting up this type of payment plan, besides paying less over time in interest, is that the TRD will not file a lien if the taxpayer chooses this type of payment plan.

Installment Agreement

An Installment Agreement is a formal written agreement that is entered into between the taxpayer and the TRD. Installment Agreements are for longer periods of time and can be entered into a plan up to 72 months. All installment agreements must be secured by a lien or other acceptable security under state law in order to be granted by the TRD. Additionally, taxpayers should be aware that pursuant to state law, by entering into a payment plan with the TRD, they waive all rights to appeal the validity of the liability in the future.

NM State Tax Payment Plan Terms

The TRD offers flexible monthly payment terms for both types of payment plans. Taxpayers can set up equal or fluctuating monthly payments, or payment amounts that increase over the term of the agreement. In most cases, the TRD will request financial information from the taxpayer when requesting an Installment Agreement.

How to Setup a New Mexico State Tax Payment Plan

The TRD offers many options for taxpayers to set up a payment plan for past due taxes.

Self-Service Option

The TRD recently allowed taxpayers to create a payment plan for tax balance, including penalties and interest. Taxpayers can select their down payment and the duration of their plan up to 72 months. Some taxpayers will have their payment plan approved automatically, while others will be contacted by the TRD to complete the process. Taxpayers can log into their online account at tap.state.nm.us/TAP/  and will see options to set up a payment plan once logged in.

Setup Appointment at District Office

Taxpayers can also set up a payment plan by also visiting a District Office. Taxpayers can call the Santa Fe District (505-827-0920) or the Albuquerque District (505-841-6262) to set up an appointment.

Call the Taxation and Revenue Department

Taxpayers can also set up a payment plan by calling the TRD directly. However, it is best to set up a payment plan online. The toll-free number is 1-866-285-2996 or taxpayers can call the general line at 505-827-0700.

Defaulting on a Tax Payment Plan

If a taxpayer misses a payment, makes payments late, does not file tax returns on time, or creates new liabilities, the TRD will send the taxpayer a Delinquent Agreement Letter. If the taxpayer fails to respond or contact the TRD after receiving this letter, the TRD will send a Defaulted Agreement Letter. Next, the TRD could pursue enforced collection actions.

In Closing

Taxpayers who cannot pay off their tax bill in full can set up one of two payment plans. The payment plan will help the taxpayer stay in compliance with the TRD. As a result, taxpayers can avoid seizures, levies, and other enforcement actions. The TRD has suspended certain enforcement collection actions until the end of August 2020. Moreover, for taxpayers with 2019 tax balances who filed on time or who filed an extension, they can submit payments online or mail payments. The benefit here is there is no consequence of interest and penalties until after April 15th, 2021. For those taxpayers with tax balances from before the 2019 tax year, they can set up a payment plan online, by phone, or by visiting a district office (by appointment only).

If a taxpayer cannot afford to make monthly payments, they should work with a licensed tax professional and consider other options. Follow this link to find experienced tax professionals who have resolved tax problems with New Mexico's Taxation and Revenue Department, or start your search below.

Disclaimer

Reading this article does not create an attorney-client relationship. This article should not be used as a substitute for the advice of a competent attorney or tax professional admitted or authorized to practice in your jurisdiction.