IRS CP161: what it means and what to do

What this notice means

The IRS says a CP161 means you have an unpaid balance due, and the notice explains how the amount was calculated.

“You received this notice because you have an unpaid balance due. What you need to do Read your notice carefully ― it explains how we calculated the amount due. Compare the figures on the notice with your tax return.”
IRS, Understanding your CP161 notice

What to do

The IRS says to compare the notice to your return, check the payments applied, and pay by the date on the notice.

“Compare the figures on the notice with your tax return. Check the list of payments we applied to your account to see if we applied all the payments you made. Contact us within 10 days of the date of your notice if you think we made a mistake. Pay the amount due by the date on the notice.”
IRS, Understanding your CP161 notice

Your deadline

The IRS says to contact it within 10 days of the notice date if you think it made a mistake, and to pay by the date on the notice.

“Check the list of payments we applied to your account to see if we applied all the payments you made. Contact us within 10 days of the date of your notice if you think we made a mistake. Pay the amount due by the date on the notice.”
IRS, Understanding your CP161 notice

If you disagree

The IRS says to call the toll-free number on your notice with documentation such as cancelled checks or an amended return ready.

“What should I do if I disagree with the notice? Contact us at the toll-free number on your notice. Please have your documentation (such as cancelled checks, amended return, etc.) ready when you call.”
IRS, Understanding your CP161 notice

If you can’t pay

The IRS says you can request a payment plan and call the toll-free number on your notice to discuss options.

“You can request a payment plan if you can't pay the full amount you owe. Call us at the toll-free number on your notice to discuss payment options or learn more about them.”
IRS, Understanding your CP161 notice

What happens if you ignore it

The IRS says no additional interest is charged if you pay in full by the due date, but interest continues to increase on any unpaid balance after it.

“We don’t charge additional interest if you pay the full amount you owe by the payment due date. However, interest will continue to increase on the unpaid balance after the payment due date.”
IRS, Understanding your CP161 notice

A related right

The IRS says you may qualify for First Time Abate penalty relief, or for penalty abatement if you can show reasonable cause and no willful neglect.

“If you owe a failure to file or failure to pay penalty, you may be eligible for penalty relief under First Time Abate. If you’re not eligible for First Time Abate penalty relief, the IRS may abate your penalties for filing and paying late if you can show reasonable cause and that the failure wasn't due to willful neglect.”
IRS, Topic no. 653, IRS notices and bills, penalties and interest charges

More from the IRS on this notice

The IRS says that if you cannot pay the full amount you will be charged a late payment or failure-to-deposit penalty, depending on what you owe.

“Will I receive a penalty if I can't pay the full amount? Yes. You will receive a late payment or failure to deposit penalty, depending on what you owe.”
IRS, Understanding your CP161 notice

The IRS says you can file Form 2848 to authorize someone, such as an accountant, to contact the IRS for you about the notice.

“Complete and send us a Form 2848, Power of Attorney and Declaration of Representative PDF, to authorize someone (such as an accountant) to contact us on your behalf.”
IRS, Understanding your CP161 notice

The IRS says that if a check payment was not credited, you should send a copy of the front and back of the canceled check as proof.

“If you made a payment for which you haven't been given credit, and you paid by check, send us a copy of the front and back of the canceled check as proof of the payment.”
IRS, Topic no. 651, Notices – what to do

The IRS says interest generally runs on unpaid tax from the return due date until paid in full, at the federal short-term rate plus 3 percent, compounded daily.

“Generally, interest accrues on any unpaid tax from the due date of the return (without any extensions) until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest compounds daily.”
IRS, Topic no. 653, IRS notices and bills, penalties and interest charges

The IRS says the failure-to-pay penalty is generally one-half of one percent of the unpaid tax for each month or part of a month, up to 25%.

“The failure-to-pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25%, of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full.”
IRS, Topic no. 653, IRS notices and bills, penalties and interest charges

The IRS says it applies payments to tax first, then penalty, then interest, and that the penalty shown on a bill is generally the total up to the notice date.

“Be aware that the IRS applies payments to the tax first, then to any penalty, and then to interest. Any penalty amount that appears on your bill is generally the total amount of the penalty up to the date of the notice, not the penalty amount charged each month.”
IRS, Topic no. 653, IRS notices and bills, penalties and interest charges

Before you reply

1. Compare the notice with your own records for the tax year it names.
2. Note the date on the notice and the response date it gives.
3. Answer by the method and address the notice gives; keep a copy of everything you send.
4. If the notice could be fraudulent, contact the IRS through the phone number or address on IRS.gov, not one printed on a suspicious letter.

Common questions

How long do I have to respond to an IRS CP161?

The IRS says to contact it within 10 days of the notice date if you think it made a mistake, and to pay by the date on the notice.

What if I disagree with the CP161?

The IRS says to call the toll-free number on your notice with documentation such as cancelled checks or an amended return ready.

What happens if I ignore a CP161?

The IRS says no additional interest is charged if you pay in full by the due date, but interest continues to increase on any unpaid balance after it.