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.
Response Deadline
Immediate action is required to verify accuracy, but there is no specific response deadline for this notice since it is an annual statement. However, if you find an error, you should contact the IRS within 30 days of the notice date.
Receiving Notice CP71A simply means that the IRS is fulfilling its obligation to provide you with an annual accounting of your tax debt under your current Installment Agreement. Think of it as an annual statement from a credit card company, but for your tax liability. The notice will detail the 'Beginning Balance' (the amount owed at the start of the year), the 'Payments Made' (all payments received by the IRS during the statement period), and the 'Ending Balance' (the total amount you still owe). It will also confirm the amount of your required monthly payment and the due date. The primary purpose of this notice is to ensure both the taxpayer and the IRS agree on the remaining debt amount and to remind the taxpayer that the agreement is still active. If the figures look correct, no immediate action is usually required other than continuing to make scheduled payments. If the figures appear incorrect, or if you believe the balance should be zero, you must contact the IRS immediately.
You receive Notice CP71A because you previously established an Installment Agreement (IA) with the IRS to pay off an outstanding tax liability over time. This notice is automatically generated once a year as long as the agreement is active and a balance remains. Common scenarios include: 1. You set up a monthly payment plan using Form 9465 or through the IRS Online Payment Agreement application. 2. You have a partial payment Installment Agreement (PPIA) or a streamlined IA in place. 3. You recently paid off the debt but the notice was generated just before the final payment was processed. 4. You owe tax from a previous year that is being paid down under the terms of the agreement.
Your immediate action should be to carefully review the notice against your own records. Within 24-48 hours, compare the 'Payments Made' section on the CP71A with your bank statements or canceled checks to confirm the IRS has accurately credited all your payments. If the figures match and the agreement terms are correct, simply file the notice with your tax records and continue making your scheduled payments. If you find a discrepancy (e.g., a payment you made is not reflected), gather copies of the proof of payment (canceled check, bank transfer receipt). Within 1-2 weeks, call the IRS at the number provided on the notice to report the error and provide the documentation. If you believe the balance should be zero, but the notice shows an outstanding balance, confirm that all penalties and interest have been fully paid. Long-term consideration requires ensuring you remain compliant by filing all future tax returns on time and paying any new taxes due, as failure to do so can cause the IRS to default your existing Installment Agreement.
Since CP71A is a status update, ignoring the notice itself does not carry direct penalties. However, ignoring the underlying requirement—which is to maintain the Installment Agreement—has severe consequences. If you stop making the scheduled monthly payments or fail to file and pay future tax returns, the IRS will issue Notice CP523, which is a 'Notice of Default' and Intent to Levy. Defaulting on the agreement means the IRS can terminate the IA, demand the full remaining balance immediately, and begin enforced collection actions, including wage garnishments, bank levies, and filing a Notice of Federal Tax Lien, significantly damaging your credit and financial stability.
Dexter can guide you through the entire response process step-by-step.
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