The IRS notice CP 171 is a balance due reminder, which can be unsettling but is a common occurrence. The IRS may issue CP 171 from time to time to remind you that you have a federal tax debt.

If you have an installment agreement, you may still receive CP 171 notices until your account is completely current or the balance is paid. It is important to understand why you are getting the notice so that you don't have to worry about it needlessly and can take the proper action. Learn about the sales tax audit procedures, as it will surely help you during tax filing.

What is IRS notice CP 171?

IRS Notice CP 171 informs you that you are still delinquent in your federal tax debt. It offers a fresh overview of your account, including the quantity you owe, penalties, and interest that have been added up.

The purpose of the notice is to remind the person that they will need to take action to settle the debt before further collection action is taken.

Why have you got CP 171?

Taxpayers are notified for a variety of reasons:

1.      There are still unpaid federal taxes.

2.      The interest and penalties keep rolling on over the balance.

3.      A payment plan is active, but you still have some balance to pay off.

4.      The IRS has made an update to your account since an Offer in Compromise or other resolution.

5.      You have not paid the total amount.

You may get a CP 171 without there being a new problem with your account.

What are the Items of Information Contained in The Notice?

Generally, a CP 171 notice will include:

·         The total amount you currently owe for your account.

·         Tax periods involved

·         The total of interest and penalties incurred.

·         Payment instructions

·         For any questions, please get in touch with the IRS.

·         Make sure to double-check with your own tax records to make sure it's right.

What Should You Do?

If you get CP 171, please read this account thoroughly.

Take the following actions:

1.      Read the notice through carefully.

2.      Check to ensure accuracy with your records.

3.      If you have an installment agreement, continue to make payments.

4.      Maintain a copy of all payments.

5.      If you think the balance is not correct, you should contact the IRS.

Proactive efforts can help avoid miscommunication and future collection problems. You need to find a tax expert (like a criminal tax attorney) when the situation is really bad.

What If You've Got a Payment Plan?

It is not uncommon to find taxpayers puzzled upon receiving a CP 171 notification even after they have set up an installment agreement.

This is normal because:

·         The IRS will continue to send reminder notices until the balance has been paid off.

·         Normally, interest and penalties stay until the debt is repaid.

·         It may take some time to update your account with payments.

So long as you are making your required payments on time, follow the terms of your agreement until you receive instructions from the IRS.

Tips for Managing Your Tax Balance

If you maintain good standing on your account, you can lessen stress and make it less likely that more serious collection moves will be taken.

Helpful tips include:

1.      Make all scheduled payments promptly.

2.      Ensure that future tax returns are filed on time.

3.      Make up-to-date tax payments to prevent a tax shortfall.

4.      Promptly review IRS notices.

5.      Maintain good records of all communications and payments.

6.      Let the IRS know of any major changes in your financial situation.

7.      The best method to successfully resolve tax debt is through consistent compliance.

IRS Notice CP 171 is primarily a reminder that you still have an outstanding federal tax balance. Repeated notices might madden you, but they are a standard part of the IRS collection procedure until your account is settled. Taxpayers who have an active installment agreement or have just filed an Offer in Compromise may still get these reminders if their accounts are being updated.

The best thing to do is to check the notice carefully for correct information, make any necessary payments, and reach out to the IRS to check if any information is wrong. Staying informed and compliant allows you to take steps to ensure you don't find yourself in a situation where you have to contend with more serious collection action in the future.