The IRS CP71 notice is an annual reminder that the Internal Revenue Service (IRS) sends to taxpayers who owe an unpaid tax balance from a previous tax year. This yearly notice explains your remaining balance, including original tax, accrued interest, and any additional penalties, and it notifies you that an outstanding tax debt remains on your account. Even if you have prior payment arrangements or have seen previous notices, a CP71 can show that a balance remains and explain why the agency may pursue liens or other collection actions.
You have payment options to address an unpaid balance: pay the full balance, set up a payment plan or installment agreement, or use online payment methods. The IRS accepts payments by debit card, electronic transfer from a bank account, and other online payment options; you can also apply online for some installment agreements. Check your payment history in your IRS account before you pay, and call the toll-free number on the notice if recent payments are missing from the balance calculation.
Review your financial situation before deciding on next steps, especially if you face economic hardship. If you cannot pay, hardship relief or currently not collectible status may pause collection activity; in other cases, you might qualify for penalty abatement for reasonable cause. Keep tax records, document payments, and consider consulting a tax professional or other tax experts to avoid wage garnishment, federal tax liens, or escalation of the collection process.
The IRS sends this annual reminder because federal law requires it to notify taxpayers about unpaid taxes at least once yearly. This legal requirement covers all cases with outstanding balances, whether you owe money from audit adjustments, unfiled returns, or penalty assessments. The notice keeps taxpayers informed about their debt status and payment options.
Unlike initial collection notices (CP14, CP501 series) that demand immediate payment, the CP71 is an informational annual notice rather than an urgent collection demand. Earlier notices like CP503 and CP504 ramp up collection threats and may warn of wage garnishment or asset seizure. The CP71 gives you a complete balance update without needing immediate action, making it different from more aggressive collection process notices.
CP71
This is the standard version of the notice sent for unpaid tax balances. It serves as a basic annual reminder and includes payment options for taxpayers who owe.
CP71A
This version indicates that the account is in "Currently Not Collectible" status. It acknowledges the taxpayer’s financial hardship and confirms that collection actions are temporarily suspended.
CP71C
This variant comes with a passport certification warning. It includes notifications about possible travel restrictions due to significant unpaid tax debts.
CP71D
Issued when the taxpayer is under an active installment agreement, this notice confirms that a payment plan is already in place and continues to be active.
CP71H
This notice is related to the Shared Responsibility Payment under the healthcare law. It addresses penalties for not meeting the individual health insurance mandate.
The standard CP71 notice goes to taxpayers with unpaid tax balances who do not have special account statuses. This notice shows your total debt, including original taxes, penalties, and interest charges. It also gives you various payment options, including online methods and debit card payments, and details about setting up payment plans.
Taxpayers facing genuine financial hardship receive CP71A notices when their accounts are currently not collectible. This version recognizes the suspension of collection activities due to your inability to make payments. The IRS will examine your financial situation occasionally to see if collection should start again.
The CP71C includes warnings about potential passport denial or revocation for taxpayers with seriously delinquent tax debt exceeding $62,000. This notice means the IRS may pursue liens or other collection actions. To prevent travel restrictions and escalated collection processes, you must address these issues immediately.
CP71D notices confirm existing installment agreements while giving you balance updates. CP71H addresses penalties for unpaid healthcare mandates from previous tax years. These specialized notices acknowledge your current arrangements while meeting the annual notification requirement that the IRS sends to all taxpayers with outstanding balances.
Several situations create unpaid balances that result in CP71 notices being issued annually:
The collection process follows a predictable pattern that helps taxpayers understand their position. An initial assessment happens when the IRS determines that additional tax is owed and charges interest on the unpaid balance. First collection notices (CP14 and CP501 series) demand payment within 21-30 days, followed by escalated notices like CP503 and CP504 that may threaten collection actions. The IRS sends annual CP71 reminders to meet legal notification requirements, regardless of the previous collection activity.
Go to your IRS account at www.irs.gov to see current balances and payment history. The system provides you with up-to-date details about your tax records and assists you in verifying the correct processing of recent payments. You can also order account transcripts that show detailed transaction histories for each tax year mentioned in your CP71 notice.
Understanding standard transaction codes helps you read your payment history and verify CP71 accuracy. Transaction Code 150 shows original tax assessments, while Code 300 indicates additional assessments from audits or corrections. Codes 610/611 show penalty assessments, and 160/161 track interest charges. Payment codes 640/641 confirm received payments, and Code 971 documents notice issuance.
Start by comparing your CP71 balance with your most recent account transcript to spot any discrepancies. Review each transaction to understand how your current debt developed, paying special attention to payment postings and penalty calculations. Contact the IRS using the toll-free number on your notice if you find errors or payments that were not properly credited to your account.
For accuracy, review all information on your CP71 notice, including tax periods, amounts owed, and personal information. Compare the notice details with your tax records and previous correspondence to spot any errors or discrepancies.
Go to your IRS online account to see current balance information and recent transaction activity. The online system presents you with the current information rather than the CP71 notice, which may not show recent payments due to processing delays.
Review your current income, necessary expenses, and available assets to determine your capacity to address the outstanding balance. This assessment determines realistic payment options and helps you choose between full payment, installment agreements, or hardship relief.
Based on your financial assessment and the amount of debt involved, choose the most appropriate approach. Full payment stops interest and penalty buildup immediately. Installment agreements provide structured monthly payments with setup fees and continued interest. Currently, the non-collectible status pauses collection during financial hardship. An offer in compromise allows qualified taxpayers to settle for less than the full amount owed.
Keep detailed records of all actions responding to your CP71 notice, including payment confirmations, correspondence, and phone conversations with IRS representatives. Verify your online account regularly to ensure your chosen resolution is processed correctly.
Many taxpayers believe they can safely ignore CP71 notices, particularly if they have established payment arrangements. This mistake can lead to missed opportunities for penalty abatement or correction of account errors.
Some taxpayers make sporadic payments toward their tax debt without establishing formal payment arrangements. This approach lacks the protections and benefits of formal installment agreements, including preventing specific collection actions.
Many taxpayers assume their payments have been correctly processed without verification through their online account or transcripts. Payment processing errors can happen, leading to incorrect balance calculations and unnecessary collection actions.
Paying the full amount promptly provides the most cost-effective resolution by stopping interest and penalty buildup. The IRS accepts various payment methods, including electronic bank transfers, debit card payments (with processing fees), checks, and money orders.
Short-term payment plans allow up to 180 days to pay the full balance with minimal setup requirements and no user fees for qualifying taxpayers. Long-term installment agreements extend payment periods for several years but need more comprehensive financial disclosure.
Taxpayers facing genuine financial hardship may qualify for currently non-collectible status when they cannot pay basic living expenses and their tax debt. This status needs comprehensive financial documentation, including income statements, expense records, and asset information.
The CP71C notice warns taxpayers with seriously delinquent tax debt exceeding $62,000 that their passport applications may be denied or existing passports revoked. The State Department receives this certification from the IRS, enabling it to halt international travel until the debt resolution.
Outstanding tax debt automatically offsets future federal and state tax refunds until the balance is paid or resolved through other means. While CP71 notices do not directly impact credit reports, the underlying tax debt may lead to federal tax liens appearing on credit reports.
Consider working with tax professionals when dealing with complex situations, large debt amounts, or multiple tax years with outstanding balances. Enrolled agents specialize in tax resolution and can represent you before the IRS, while CPAs provide broader financial planning expertise. Tax attorneys handle complex legal issues and appeals, and Low Income Taxpayer Clinics offer free or low-cost assistance for qualifying individuals.
Understanding your IRS CP71 notice and taking appropriate action protects you from collection escalation while allowing you to resolve your tax debt on favorable terms. Whether you immediately pay the full amount, create a payment plan, or pursue hardship relief, promptly responding to your notice demonstrates good faith compliance and facilitates resolution.
Review your situation using guidance, verify your account information through IRS transcripts, and pick the resolution strategy that best fits your financial circumstances. Remember that tax debt situations can be complex, and seeking professional assistance often leads to better outcomes when dealing with significant amounts or complicated circumstances.
Receiving a CP71 notice means you have an outstanding balance on your federal tax account from previous tax years. This annual reminder is required by law and provides updated information about your total debt, including accumulated interest and penalties. The notice does not necessarily require immediate payment if you already have approved arrangements or qualify for hardship status with the IRS.
Response requirements depend on your current situation with the IRS and account status. If you have an approved installment agreement and remain current with payments, or your account is not collectible, an immediate response may not be necessary. However, you should promptly contact the IRS if the notice shows incorrect information or if you lack existing payment arrangements.
The IRS must legally send annual balance reminders to all taxpayers with outstanding debt, regardless of existing payment arrangements or account status. Your CP71 notice acknowledges your payment plan while providing an updated total of your remaining balance, including any changes in penalties or interest calculations that affect your debt.
Access your IRS online account to order account transcripts for the tax years mentioned in your CP71 notice for detailed transaction history. Compare transcript information with your notice to verify that payments were properly credited and penalties were correctly calculated. Look for transaction codes that show assessments, fees, and notice generation to understand how your balance developed over time.
A CP71C notice specifically warns about passport certification for taxpayers with seriously delinquent tax debt exceeding certain thresholds, typically around $62,000. This certification can result in passport application denial or revocation of existing passports until the debt is resolved or payment arrangements are established. Immediate attention is required to prevent travel restrictions and collection escalation.
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