IRS Notice CP501: what it means and what to do
A CP501 is the IRS's first reminder that you still have an unpaid balance. You're early in the process, but the IRS has started counting.
What a CP501 means
The IRS sends a CP501 when your balance is still unpaid a few weeks after the first notice, the CP14. It shows your current balance, which is usually higher than on the CP14 because interest and penalties have kept adding up.
A CP501 doesn't allow the IRS to take anything yet. But it's a sign that your account is moving through the collection process, and the next letters will be more serious.
What to do now
- Check the balance. Make sure the amount matches your records. If you already paid or think there's a mistake, respond with proof using the instructions on the notice.
- Pay in full if you can, through your IRS online account or IRS Direct Pay.
- Set up a payment plan if you can't. Short-term plans of up to 180 days have no setup fee. If you owe $50,000 or less, you can usually set up a long-term plan online. See how IRS payment plans work.
- Don't forget other years. If you have unfiled returns, the IRS will usually want them filed before it agrees to a plan.
What happens if you ignore it
The IRS will send a CP503, a second reminder, and then a CP504 notice of intent to levy. Along the way it may file a federal tax lien. Interest and penalties continue to grow the whole time.
Where CP501 fits
The IRS sends collection notices in this order. A CP501 is the second one.
Common questions
I never got a CP14. Is that a problem?
Not necessarily. Notices sometimes go to an old address or get lost. What matters is responding to the CP501 now. Make sure the IRS has your current address so you don't miss later notices.
Can I pay part of it now?
Yes. Any payment reduces the balance that interest and penalties are charged on. But a partial payment alone won't stop the notices; you'll still need to pay in full or set up a plan.
Should I call the IRS?
You can, using the number on the notice, but wait times can be long. Many payment plans can be set up online instead, or a tax professional can contact the IRS for you.
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Written by Jonathan Samuel, EA, an Enrolled Agent licensed to represent taxpayers before the IRS. This page is general information, not advice for your specific situation.