Episode 29: In this episode, Timalyn discusses the IRS CP14 notice. You'll receive this form if you owe unpaid taxes to the IRS. It's a demand for payment. So, what do you do now? Timalyn will provide all the information you need to know to handle this issue.
Timalyn begins by pointing out that the IRS wants you to set up an account and ideally receive notifications electronically. This may or may not be the best route for you. Receiving important notices in the mail may be a better way of making sure you don't miss out on important communications.
What is an IRS CP14 Notice?
This is an official communication from the IRS informing you of taxes you owe, the specific amount, and it serves as a demand for payment.
CP actually stands for "Computer Paragraph." Understand this is a computer-generated form that no human has handled. Also, understand that the IRS can and does make mistakes. It may not be accurate.
The CP14 provides the following information:
● The amount due
● The tax year related to the unpaid taxes
● The date the payment is required to be made
What Should You Do if You Receive a CP14 Notice?
Timalyn explains that your first step is to remember to breathe. Next, carefully review the information provided. Compare that information to the copies of your IRS returns. Do they match?
If You Think the CP14 is incorrect, Review the 3 Phases of Tax Relief
In Episode 9, Timalyn explained these phases. First, review your IRS transcript online. It will tell you when your return was filed, any balance due on the account, and any payments already made. Sometimes, payments can cross in the mail and this is why you may have received a CP14, even though you paid your taxes.
Timalyn wrote a blog post titled: "How to Get Your IRS Transcript in 3 Steps." This is a good resource if you don't know how to review your tax transcript.
What if You Do Owe Unpaid Taxes?
Timalyn released a podcast episode (Episode 22) outlining your options if you can't pay your tax bill. You'll want to determine how long it will take you to pay the taxes you owe.
If the balance is less than $10,000 and you've tax compliant, you may be eligible for a guaranteed installment agreement allowing you 36 months to pay it off. Timalyn has an e-book on her website, which you can purchase. It will walk you through this process, step-by-step.
If you owe more than $10,000 but less than $50,000, you may have the option of setting up a streamlined installment agreement. Timalyn discusses IRS installment agreements in Episode 10.
It's also possible to get the IRS to temporarily delay any collection activities. Your status would be classified as "Currently Not Collectible." This takes effort because you have to be able to prove to the IRS that you're unable to pay, at this time. This is usually due to financial hardship. You and the IRS may disagree on "reasonable" living expenses. Listen to Episode 18 for more information.
Timalyn urges you to make every effort to pay off your tax debt as soon as possible. The IRS can and will assess significant interest and penalties based on your unpaid taxes.
How to Avoid this Issue in the First Place (a Bonus)
While the IRS has been lenient since the pandemic, they still have continued to issue tax liens and levy bank accounts. You can avoid getting into this situation by making estimated tax payments.
Self-employed individuals make estimated tax payments on a quarterly basis. Doing so can help you avoid an underpayment penalty. W-2 employees already make estimated tax payments through their withholdings.
Interestingly, Timalyn points out that as a business owner, you don't have to wait until the end of the quarter to make the payments. In fact, you can make tax payments on a monthly or even bi-weekly.
By paying into the IRS, you can create a cushion in case life happens. Even though you are planning to pay your quarterly payment, an unforeseen emergency can creep up and cause you to have to cover the cost of expenses you didn't anticipate. It happens.
If not being able to pay your taxes is a reoccurring problem, consider getting tax planning advice. You may be able to reduce your overall tax liability during the year.
The Taxpayer Bill of Rights provides certain rights, such as the right to representation. Take advantage of that right.
If you are a tax professional, Timalyn provides a LinkedIn Live Event on Tuesday at 11:00EST. It focuses on how to negotiate with the IRS on behalf of your clients. Follow Timalyn on LinkedIn. You'll need to sign-up for the events.
The next episode is #30! Timalyn encourages you to listen to the beginning of Episode 10 to see what a milestone that actually was. Episode 30 will be even more special.
Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it. After all, back taxes shouldn't ruin your life.
As we conclude Episode 29, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, Google Podcasts, and many other podcast platforms.
Remember, Timalyn Bowens is America's Favorite EA and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.
For more information about tax relief options, visit https://www.Bowenstaxsolutions.com/ .
If you have any feedback, or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.
Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.
