CP71C notice: what it means and what to do
A CP71C is an annual reminder that you still owe a balance. It is not a new demand, no new collection action is attached to it, and nothing about it requires you to do anything by a particular date. The IRS is required to send an annual statement to anyone with an outstanding balance, and this is that statement.
Most people who receive one have the same two reactions. First, I thought this was finished. Second, why is the number so much bigger than I remember. Both have straightforward answers.
What is a CP71C notice?
It is the yearly account statement for a tax debt that has not been resolved. It arrives once a year, usually with no warning and often several years after you last heard anything.
It commonly goes to people whose accounts are not being actively pursued. That includes accounts placed in currently not collectible status, accounts where the IRS has simply not allocated resources to chase, and accounts where the taxpayer moved and correspondence stopped reaching them.
There are several notices in the same family, including CP71, CP71A and CP71D. They differ slightly in wording and circumstance and they mean the same thing.
Why is the balance so much bigger than I remember?
Because penalties and interest have continued running the whole time, including through any period when nothing appeared to be happening.
The failure-to-pay penalty accrues monthly until it reaches its cap. Interest compounds daily and applies to the penalties as well as to the tax. Over five or eight years of silence, a balance can grow to something that bears very little resemblance to the tax you originally owed.
This matters practically. Look at how the notice splits the total between tax, penalty and interest. If penalties are a large share of it, that portion is frequently reducible, and quite often nobody has ever asked.
Does this mean they are coming after me?
No. A CP71C is informational. It carries no deadline, no threat of levy, and no requirement to respond.
Before the IRS can levy your wages or your bank account, they have to issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, usually LT11, Letter 1058 or CP90, and then wait 30 days. A CP71C is not that letter and does not substitute for it.
What a CP71C does tell you is that the debt is still on the books, still growing, and still capable of becoming active again. Accounts in currently not collectible status are reviewed periodically, and a rise in income can bring collection back to life.
The thing this notice does not tell you
There is a ten year limit on how long the IRS has to collect an assessed tax. It is called the collection statute expiration date, and it is the single most important fact about an old tax debt. Your CP71C does not mention it.
Where you sit on that clock changes everything about what you should do.
If the clock is nearly finished, an aggressive attempt to settle can be the wrong move. Certain actions suspend or extend the statute, including filing an offer in compromise, requesting a hearing, or periods spent outside the country. Somebody can spend money pursuing a settlement on a debt that was about to expire anyway.
If the clock has years to run, resolving it properly is worth doing, because the balance will keep growing and collection can restart at any point.
The only way to know is to pull your account transcripts, which show the assessment dates and any events that suspended the statute. It is not complicated to establish and almost nobody does it. If you are going to do one thing with a CP71C, this is the thing.
Can a tax debt affect my passport?
Yes, and CP71C notices often mention it, which is usually the first anyone has heard of it.
Where a tax debt is large enough to be classified as seriously delinquent, the IRS can certify it to the State Department, which may then refuse to issue or renew a passport and can in some cases revoke one. The threshold is a substantial sum and it is adjusted each year for inflation.
Certification is reversed when the debt is paid, when it becomes legally unenforceable, or when you enter into an instalment agreement or an accepted offer in compromise. Requesting a collection due process hearing or having an innocent spouse claim pending also generally prevents it.
If you travel for work, have family abroad, or your passport is up for renewal, this is the part of a CP71C to take seriously. Reversing a certification takes time, and it is far easier to prevent than to undo when you have a flight booked.
What are my options?
Do nothing, deliberately. This is a legitimate choice and it is sometimes the right one, particularly if you are in currently not collectible status, your circumstances have not improved, and the statute is running down. Doing nothing on purpose after checking the facts is very different from doing nothing because you are avoiding it.
Check the statute first. As above. Everything else depends on it.
Ask for penalty abatement. On an old balance, penalties are frequently a large share of the total. First-time abatement is available to people with a clean history in the preceding three years and is largely administrative. Reasonable cause covers illness, bereavement and similar circumstances. Nobody offers either of these. You have to ask.
Set up an instalment agreement, if your situation has improved and you would rather have it finished than hanging over you. It also removes any passport certification.
Confirm you are still in currently not collectible status, if you thought you were. These get reviewed, and people sometimes discover they were taken out of it without noticing.
File anything outstanding. If there are unfiled years behind this, the IRS will not agree to most arrangements until they are filed, and the balance may be wrong in the meantime.
Do I actually need help with this?
There is no urgency here, so take a moment rather than reacting.
You can handle it yourself if you recognise the balance, you can now afford to pay it or set up a payment plan online, and all your returns are filed. Do that, then ring and ask for first-time penalty abatement.
It is worth having someone when you have no idea where you are on the ten year clock, when the balance is far larger than you expect and you want to know what is penalty, when a passport matters to you, when there are unfiled years involved, when your circumstances have changed materially in either direction, or when you simply want to know whether this will ever end.
That last one is the most common reason people finally deal with a CP71C. Not the money. The wanting it to be over.
Find out whether this ever ends
Tell me the notice date, the tax years involved, and roughly the balance. The most useful thing I can do with an old debt is establish where you are on the collection statute, because that determines whether you should be settling it, waiting it out, or leaving it alone entirely.
I file an authorisation, pull your full transcripts, and send you a written memo on what is assessed, what is penalty and interest, when the statute expires on each year, whether anything is unfiled, and what each option would actually cost you. That phase is $999 and it stands on its own.
Quite often the answer is that less needs doing than people feared.
Please do not attach the notice or include your Social Security number in a first message. A date and a sentence is enough, and we move to a secure portal once we are talking.
Other notices: CP14 · CP504 · LT11 and Letter 1058 · CP2000 · all IRS notices and audits
Michael Jones, EA & CFP®. Enrolled Agent, licensed by the U.S. Department of the Treasury to represent taxpayers before the IRS in all fifty states. This page is general information about how CP71C notices work, not advice about your particular notice. Thresholds, penalty rates and procedures change, so confirm anything here before relying on it.