If you have a balance due on a tax account, which means you owe the Internal Revenue Service (IRS) money, the department will mail you a CP501 notice. When you receive this notice, you need to act quickly, as the wrong moves can lead to additional interest and potential penalties.
Here is what to do:
Read it carefully
The notice you receive will have adequate information regarding the amount you owe, when to make the payment and your payment options. Ensure you read the notice carefully to understand it in depth.
Choose an option
Typically, the IRS expects three actions from you – paying the amount, making a payment plan and contacting them if you disagree with the notice.
If you agree with the amount shown on the notice and can pay it in total, use any of the payment options provided. If you can’t pay the full amount you owe, the IRS accepts partial payments through different payment plans. Learn more about each plan, including eligibility, requirements and fees, to make informed decisions.
If you disagree with the CP501 notice, call the toll-free number shown on your notice. You should be ready to state why you disagree and provide relevant documents to support your claims, such as canceled checks.
What if you don’t respond?
If you ignore a CP501 notice, that is, you don’t pay or contact the IRS, the department can file a federal tax lien. Consequently, the government may have a right to your interests in your current assets and any assets you acquire after the lien is filed, including real estate, personal property and financial assets.
If the IRS sends you a CP50I notice, consider seeking legal guidance sooner to know the best way forward.