What it is
What is a CP14 notice?
A CP14 is the first letter the IRS sends when it believes you owe. It is a notice of balance due, the beginning of the collection conversation rather than the end of it, and the penalty printed on it is very often the part that can be removed.
It breaks what the IRS believes you owe into three numbers: the tax itself, the penalty, and the interest. Reading those three lines separately is the whole trick, because they behave completely differently.
The three lines
Three numbers, and only one of them is usually negotiable.
The tax is the tax. If the return was right, that figure is what you owed and no letter changes it. The interest is statutory and accrues on the unpaid balance; it generally follows the penalty, so interest attributable to a penalty that gets removed comes off with it.
The penalty is the part worth fighting. On a CP14 it is usually the failure to pay penalty, assessed under Internal Revenue Code Section 6651, and there are two established routes to having it removed.
The authority
Two routes to removing the penalty.
Which route fits you depends on your record, not on your preference.
If your recent record is clean, the route is the First Time Abate administrative waiver, and for a straightforward case an agent can often grant it on a call to the number printed on the notice.
If a penalty in the last three years closes that door, the route is reasonable cause relief under Internal Revenue Code Section 6651(a) and Treasury Regulation Section 301.6651-1(c)(1), which turns on what was happening in your life when the deadline passed.
How to respond
Four steps, in the order that works.
Read the three lines separately
Tax, penalty, interest. Know which figure you are dealing with before you call anyone, because the answer is different for each one.
Verify the balance is really yours
Compare it against your return and your payment records. A misapplied payment or a return still in processing produces a CP14 for a balance you do not actually owe.
Pay or arrange the tax
Pay the balance, or set up an installment agreement online. This step comes before the penalty request because it is what makes the request likely to succeed.
Ask for the penalty to be removed
Take the waiver route if your record is clean, or the reasonable cause route if it is not. Ask for written confirmation of the decision either way.
Questions people ask
Straight answers
Is a CP14 notice serious?
It is the routine first notice of a balance due, not a lien and not a levy, so there is time to deal with it properly. It becomes serious if it is ignored, because the collection sequence continues and the balance keeps growing.
I got a CP14 notice but already paid. What now?
This is common, most often when a payment was applied to the wrong year or a return is still being processed. Call the number printed on the notice with your records in front of you, and do not pay a second time before the account is checked.
Can the interest be removed too?
Interest is statutory and accrues on the unpaid balance, so it is not removed on its own the way a penalty is. It generally follows the penalty, meaning interest attributable to a penalty that gets removed comes off with it.
What if I cannot pay the balance right now?
Set up an installment agreement online. Being current on a payment plan counts for the same thing as having paid in full when you ask for penalty relief, and it stops the situation from escalating while you sort it out.
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