IRS CP71 Notice - An Annual Reminder of Balance Due

Getting a letter from the IRS can be a heart-stopping moment. Your mind races, your palms get sweaty, and a dozen worst-case scenarios flash before your eyes. If you’ve recently received a CP71 notice, take a deep breath. You’re not alone, and this isn’t a reason to panic. In fact, understanding what this notice means is the first step toward resolving your tax situation and finding peace of mind. 

At its core, the IRS CP71 notice is simply an annual reminder from the IRS that you have an outstanding tax balance. Think of it as a yearly statement, not a new enforcement action. The law actually requires the IRS to send these reminders, so in a way, they’re just doing their job. But we know it feels like much more than that. It feels personal, stressful, and overwhelming. That’s why we’re here to walk you through it, step by step. 

What Exactly Is This Piece of Paper? 

The IRS CP71 notice is formally known as the “Annual Reminder of Balance Due.” It’s generated once a year to keep you informed about a tax liability that hasn’t been paid. The notice will show the tax year in question, the original amount you owed, and the penalties and interest that have been added since. 

The IRS must provide a “notice and demand for tax” after a tax has been assessed. While the initial notice and demand is the first step in the collection process, the CP71 is a follow-up to ensure you’re aware of the ongoing balance. 

“But My Account Is ‘Currently Not Collectible’!” – The IRS CP71A Variation 

Some of you might have received an IRS CP71A notice. This version is sent when your account is in what the IRS calls “Currently Not Collectible” (CNC) status. If you’ve previously communicated with the IRS and demonstrated that you’re experiencing significant financial hardship, they may have placed your account in CNC. This means they’ve temporarily paused active collection efforts like wage garnishments or bank levies. 

Receiving a CP71A can be confusing. If the IRS isn’t actively collecting, why send a reminder? It’s because the liability doesn’t go away. Interest and penalties continue to accrue, and the IRS is still required to keep you updated on the total amount you owe. It’s a glimmer of hope in the sense that you have breathing room, but it’s not a permanent solution. 

The Elephant in the Room: Can They Really Take My Passport? 

One of the most alarming parts of the CP71 notice is the section that mentions the potential for your passport to be denied or revoked. This is a real possibility, but it’s important to understand the specifics. This action is reserved for taxpayers with what the government calls “seriously delinquent tax debt”. 

Under IRC § 7345, a seriously delinquent tax debt is a federal tax liability that is: 

1. Assessed and legally enforceable. 

2. Greater than $66,000 (This amount is for 2026 and is adjusted annually for inflation. See Rev. Proc. 2025-32). 

3. Subject to a filed Notice of Federal Tax Lien or a levy action. 

This isn’t a step the IRS takes lightly, and it doesn’t happen overnight. More importantly, there are exceptions! Your liability is NOT considered seriously delinquent if you are: 

• Making timely payments on an Installment Agreement. 

• Have an accepted Offer in Compromise. 

• Have requested a Collection Due Process hearing. 

• Have requested innocent spouse relief. 

So, while the passport warning is scary, it’s also a powerful motivator to engage with the IRS and find a solution. 

You Have Options! Let’s Find the Right Path for You 

This is the most important part of this discussion. You are not powerless. The IRS has several programs designed to help taxpayers resolve their unpaid taxes. Here are the most common paths forward: 

Resolution Option	Description	Who It's For
Installment Agreement	A monthly payment plan to pay off your unpaid tax over time.	Taxpayers who can't pay in full immediately but can make regular monthly payments.
Offer in Compromise (OIC)	An agreement to settle your unpaid tax for less than the full amount owed.	Taxpayers experiencing significant financial hardship who cannot pay their full tax liability.
Currently Not Collectible (CNC)	A temporary pause on collection actions due to financial hardship.	Taxpayers who cannot afford to pay their taxes and their basic living expenses.
Collection Due Process (CDP) Hearing	A formal hearing to appeal a lien or levy and propose collection alternatives.	Taxpayers who have received a Notice of Federal Tax Lien or a Final Notice of Intent to Levy.

An Installment Agreement (IA), authorized by IRC §6159, is the most straightforward option. You agree to a set monthly payment, and as long as you make those payments on time, the IRS will not take further collection action. For some, a Partial Payment Installment Agreement (PPIA) may even be possible, where you pay less than the full amount over time. 

An Offer in Compromise (OIC), under IRC § 7122, is a more complex but potentially life-changing solution. If you can prove to the IRS that you don’t have the ability to pay your full unpaid taxes, they may agree to settle for a lower amount. This process is rigorous and requires detailed financial disclosures, but it can be an incredible solution. 

The First Step Is the Hardest, But You Don’t Have to Take It Alone 

Ignoring a CP71 notice won’t make it go away. The penalties and interest will continue to grow, and the risk of more serious collection actions, like a levy, passport revocation or   lien on property will increase. The single most important thing you can do right now is to take action. 

We know how daunting this can be. The tax code is complicated, and dealing with the IRS is intimidating. But you don’t have to do it alone. We are here to help you understand your options and find the best solution for your unique situation. We can help you navigate the process, communicate with the IRS on your behalf, and work towards an exit strategy that lets you move forward with your life. 

Don’t let another year go by with this weight on your shoulders. When you are ready, book a consultation with us. Let’s talk about your CP71 notice and create a plan to put your tax worries behind you for good. 

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