IRS Notice CP71 is an annual reminder statement sent to taxpayers who currently have an established Installment Agreement (IA) with the IRS. It serves as a yearly summary of your remaining tax debt, payment history, and the total interest and penalties assessed over the past year.
Response Deadline
Immediate action is required only if you find an error or discrepancy in the account summary. Otherwise, there is no response deadline, as this is an informational notice regarding an existing agreement.
This notice is not a new bill or a demand for immediate action, but rather a yearly 'statement of account' for your existing payment plan. It confirms that your Installment Agreement is still active and provides a detailed breakdown of your account status. Specifically, it shows the starting balance of your debt at the beginning of the year, all payments you made during the year, any additional penalties or interest that accrued, and the remaining balance you owe as of the notice date. The CP71 is the IRS’s way of fulfilling its obligation to keep you informed about the status of your long-term debt repayment plan. Receiving this notice means the IRS has successfully processed your payments and is reminding you of your commitment to the payment plan. Reviewing it carefully helps ensure the IRS’s records match your own, particularly regarding the total amount paid and the remaining principal balance.
You receive IRS Notice CP71 because you currently have an approved Installment Agreement (IA) with the IRS to pay off a past-due tax liability. The IRS sends this statement annually to comply with legal requirements for notifying taxpayers about the status of their debt. Specific scenarios include: 1) You are making monthly payments under a standard Installment Agreement. 2) You are repaying tax debt through an Offer in Compromise (OIC) collateral agreement. 3) You have an existing tax liability that is being collected through a payroll deduction or bank levy agreement. 4) The IRS is required to send this annual statement as long as there is any outstanding balance remaining on your account under the agreement.
The primary action is careful review, not immediate payment, as your payment plan should already be in place. **Immediate actions (within 24-48 hours):** File the notice securely with your other tax records. Compare the 'Payments Received' section against your own records (bank statements, canceled checks) to confirm accuracy. **Short-term actions (within 1-2 weeks):** If you find any discrepancies (e.g., a payment you made is not reflected), immediately call the IRS number listed on the notice to request an explanation and correction. If the notice indicates a balance due that seems too high, verify that the interest and penalty calculations are correct. **Long-term considerations:** Continue making your scheduled payments on time. If your financial situation has changed significantly and you can no longer afford the current payment amount, you should proactively contact the IRS to request a modification of your Installment Agreement before defaulting.
Since CP71 is an informational summary of an existing agreement, ignoring the notice itself has no direct penalty. However, if you ignore the *underlying obligation*—that is, if you stop making the payments detailed in the agreement that the CP71 summarizes—the consequences are severe. Missing payments will cause the IRS to default your Installment Agreement. This allows the IRS to restart aggressive collection actions, including issuing a Notice of Intent to Levy (seizing wages or bank accounts) or filing a Notice of Federal Tax Lien (damaging your credit). Furthermore, the IRS will assess additional failure-to-pay penalties and interest on the unpaid balance, increasing your total debt significantly.
Dexter can guide you through the entire response process step-by-step.
Get StartedIRS Notice CP71C is a notification informing you that the IRS has offset (applied) a tax refund or overpayment from one tax period to cover a tax debt you owe for a different tax period. This notice confirms that the offset transaction has been completed and provides a detailed accounting of how the funds were applied.
IRS Notice CP71A is an annual statement sent to taxpayers who have an existing Installment Agreement (IA) with the IRS. This notice serves as an annual reminder, summarizing the current balance due, payments received over the last year, and the remaining payment schedule. It is not a bill for a new liability but a status update on a pre-existing debt.
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