IRS notice CP501
CP501 notice: a reminder that you still owe
A CP501 is a reminder that you owe a balance on one of your tax accounts. You received it because the IRS has not received your payment, or a response, after its earlier notice asking you to pay.
What to do
Pay the amount by the due date shown on the notice, online or by mail in the envelope the IRS sent, including the bottom part of the notice so the payment is credited correctly. If you cannot pay it all, apply for a payment plan, online or by mailing Form 9465, Installment Agreement Request.
If you disagree with the changes to your account, call the toll-free number on the notice right away, with supporting paperwork such as cancelled checks or an amended return. If you need to correct the return itself, that goes on Form 1040-X.
Before collection action is taken, you can also ask for an appeal under the Collection Appeals Program, following the instructions on the notice.
What happens if you do not respond
If you do not pay, make payment arrangements or call, the IRS can file a Notice of Federal Tax Lien: a public notice to your creditors that the government has a right to your current assets and any you acquire later, which can affect your ability to get credit.
Interest keeps accruing on the unpaid balance until it is paid in full, and a failure-to-pay penalty applies. If you contact the IRS by the due date, it may be able to remove the penalty, depending on your situation.
Returns to file before you can set up a plan?
The IRS generally wants every required return filed before it agrees to a long-term payment plan, and a notice can be the first sign that a year is missing. USTAXX prepares current and past-due returns, one year at a time, so the account is complete. We are an IRS Authorized e-file provider and work with clients remotely through a secure portal, by phone or video, and in person at our office in Naperville, IL.
Questions people ask
What does a CP501 mean?
That you still owe a balance and the IRS has not received payment or a response after its earlier notice. It is a reminder, and the second step in the collection sequence.
Can the IRS file a lien after a CP501?
Yes. If you do not pay, arrange to pay or contact the IRS, it can file a Notice of Federal Tax Lien, which can affect your ability to get credit.
Can I appeal a CP501?
You can request an appeal under the Collection Appeals Program before collection action is taken, following the instructions on the notice.
Where these rules come from
- IRS: Understanding your CP501 notice
- IRS: Publication 1660, Collection Appeal Rights
- IRS: Publication 594, The IRS Collection Process
- IRS: Payment plans and installment agreements
General information, current when written, not advice about your situation. Fees and forms change; the official pages above are the authority.