What Is a CP71C Notice?

A CP71C is an annual IRS notice that serves as a reminder of an ongoing unpaid tax balance. Unlike balance-due notices (CP14, CP501-CP504), the CP71C is not part of the immediate collection escalation sequence — it is typically sent once per year to accounts that have an established balance but are not currently in the active collection cycle.

You may receive a CP71C if:

  • Your account is in Currently Not Collectible (CNC) status — the IRS is not actively collecting but annually reminds you the balance exists
  • Your case is pending resolution (for example, while an OIC is under review)
  • You have an existing installment agreement and the IRS is providing an annual statement
  • Your account is inactive for some other reason (statute considerations, bankruptcy, etc.)

What the CP71C Shows

The notice will include:

  • The tax year(s) with outstanding balances
  • The original tax assessed
  • Penalties that have accrued
  • Interest that has accrued to date
  • The current total balance

Because the notice is annual, you may notice that the balance has grown from the prior year — reflecting another year of interest and penalty accrual.

The Balance Continues to Grow

Even while you are in CNC status, an installment agreement, or any other non-payment arrangement, interest and penalties continue to accrue on the unpaid balance:

  • Interest: Approximately 8% per year (current rate), compounding daily
  • Failure-to-pay penalty: 0.5% per month while in an installment agreement (reduced from 0.5% to 0.25% per month while compliant) — up to a maximum of 25% of the original tax

On a $20,000 balance, annual accruals can add $1,500–$2,000 per year. This is why resolving the balance — rather than simply pausing collections — is ultimately more economical.

How Long Can This Go On?

The IRS has 10 years from the date of assessment to collect a tax debt (the Collection Statute Expiration Date, or CSED). During those 10 years, interest and penalties accrue. The CP71C reflects where your balance stands in that process.

If your account is in CNC status and the collection statute eventually expires, the IRS must stop collection efforts and the balance is legally extinguished — though this is not guaranteed and depends on many factors.

What to Do if You Receive CP71C

If you are already in a payment plan: Review the notice to ensure your payments are being applied and the balance is declining as expected. If the balance shown seems higher than expected, request an IRS Account Transcript to review how payments have been applied.

If you are in CNC status: The notice is informational. You are not required to take immediate action — but understand that the balance is growing and evaluate whether your financial situation has improved enough to pursue resolution. Find out which program applies to your situation by clicking here. Find out which program applies to your situation by clicking here.

If you have no current arrangement: This is a prompt to explore options. The longer the balance grows unchecked, the larger the eventual resolution cost.

If you believe the balance is wrong: Request an Account Transcript from IRS.gov and review the full history. You can dispute an incorrect balance in writing.

Resolution Options

No matter where your account stands when you receive a CP71C, the same resolution programs are available:

  • Installment Agreement — structured monthly payments
  • Offer in Compromise — settlement for less than full amount if you qualify
  • Penalty Abatement — removing penalties if you qualify
  • Currently Not Collectible — formally pausing collections during hardship
  • Full Payment — eliminates all interest and penalty accrual permanently

Use our free eligibility guide to find out which option fits your situation.