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Notice CP501 and CP502: How to handle it

Can’t figure out your notice CP501 and CP502?

What are CP501 and CP502 notices?

If you are owing back taxes, you should be watching and waiting for when the agency will contact you by sending you a cp501 and other IRS notices. Fortunately, you get lots of notices from the IRS before they take action and you get punished for your acts of tax evasion – whether deliberate or neglectful. Therefore, you should be asking fundamental questions about IRS notices like what the cp501 notice is and how to get in touch with the IRS to pay IRS notice online.


CP501, the IRS’s friendly reminder

The CP501 IRS notice the first remainder you get, it is a written statement the IRS sends to you about a balance due on a tax account. This alerts you about an outstanding balance that needs to be paid within 10 days. This includes the due date, the amount you owe, and your payment options. Your taxes are considered delinquent so your balance could reflect more than what you expected.

CP502, a more urgent messanger

The CP502 notice is the second written remainder that comes when you don’t respond to your first remainder. It is written in a more urgent tone and a stronger language to remind you that you are yet to respond to the first message.

In this notice, you will observe that the balance is now larger than it was in your CP501 notice. If you take proper actions ahead of time, you can ask for a negotiation with the IRS and they might just be willing to do discuss terms if your tax situation demands that they do.


What should I do if I owe back taxes?

The CP501 and CP502 notices both have a response section with an outline of the steps you can do to take care of your taxes. You can consider any of the following options.

  1. Pay your IRS notice both CO501 and CP502.
  2. Get an IRS tax installment plan.
  3. Dispute the amount you owe.

The best way to pay your over-due taxes is to get on an IRS payment plan if you can’t pay in full, this allows you to pay your taxes in full within the approved timeframe and you get the benefit of interests and penalties no longer accruing. However, if you prefer to pay your balance in full, there’s a variety of options for paying the IRS and the state.


How to avoid owing taxes

Though the CP501 and CP502 notices are written in less threatening language than the upcoming notices, you must handle this matter quickly whether on your own or by requesting counsel from a tax advisor.

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Your IRS notices will include the due date, giving you an idea of the amount of time you have left to plan. During the IRS hours of operations, they are open to making a payment plan that is convenient for you.

I have received a cp501h notice, what do I do?

A CP501h is a notice that gives you a shared responsibility payment because one or more members of your tax household did not have the necessary health insurance coverage that the Affordable Care Act requires.

It could also mean that you did not include the necessary paperwork that proves that everyone in your tax household is covered by the required health insurance. You may not be required to pay the amount due, however, it will become a debt and attract annual interest that may be deducted from your tax return if you eventually receive one.

If you have received a CP501h, it is in your best interest to speak to a qualified tax professional. Our team of CPAs and attorneys will analyze your unique tax situation and provide you with expert help and tax relief solutions. Call us now.

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Internet subscribers, users, and online readers are advised not to act upon this information without seeking the service of a professional accountant. Any U.S. federal tax advice contained in this website is not intended to be used for the purpose of avoiding penalties, of any kind, under U.S. federal tax laws.