IRS Notice CP71: Unpaid Balance, Passport Warning & What to Do

According to the IRS, CP71 is sent because you still have an unpaid balance on one of your tax accounts. It is a collection-stage reminder, not a lawsuit and not by itself a levy. It still matters, because the IRS says that if you do not respond, interest keeps accruing, additional penalties may apply, future refunds may be offset, and a passport can be affected if you are certified as having seriously delinquent tax debt.

Confirm the notice number on your letter. Layouts and suffixes vary, so match the tax year and balance to your own records before you act.

The IRS states that the Fixing America's Surface Transportation (FAST) Act generally prohibits the State Department from issuing or renewing a passport for a taxpayer with seriously delinquent tax debt, and that the Department of State may revoke or decline a passport if you are certified. Receiving a CP71 is not the same as being certified. The notice is explaining the rule, so read the notice itself and the IRS passport page to see whether your balance could meet the definition.

If you have an approved installment agreement, the IRS passport guidance describes exceptions for some taxpayers. Check the current rules before assuming your situation is covered either way.

• Pay what you can now. The IRS says interest and applicable penalties stop being added as soon as the balance is paid in full, and paying part reduces what keeps growing.
• Payment plan. You may qualify to apply online and receive immediate notice if approved. If you cannot apply online, mail an installment agreement request or call the number on your notice.
• Temporary collection delay. The IRS says it may temporarily delay collection if you are facing financial hardship until your situation improves.
• Offer in compromise. In certain circumstances you may settle for less than the full amount if you cannot pay or full payment would cause hardship. Use the IRS Pre-Qualifier before you spend time on an application.

The IRS says payments can take up to 21 days to post. If you paid in full within that window, you may disregard the CP71. If you have an approved installment agreement, keep making the payments the agreement requires. If you applied but have not been approved, the IRS says to pay as much as you can now to stop additional interest and penalties from adding to the balance. You can check your balance and payment history in your IRS online account.

• Keep the notice, the filed return for that year and any payment confirmations in front of you.
• Write down the tax year and the specific amount you cannot reconcile.
• Ask which payment or credit is missing, what you must do and by when, and how you will be able to confirm the correction.
• Record the date, what was agreed and any follow-up deadline.