IRS Notice CP501: First Reminder of an Unpaid Balance

The IRS sends a CP501 because it hasn't received your payment or a response to the previous balance-due notice. The letter repeats the amount you owe — now including additional interest and failure-to-pay penalty — and gives a new due date.

Think of CP501 as a nudge with a clock attached. Nothing has been seized and no lien has necessarily been filed, but the account is now formally in the reminder stage. Compare the balance to your CP14: it should be slightly higher because of interest and the monthly penalty.

The CP501 asks you to pay by the due date printed on the notice. The IRS's own guidance is simple: pay by that date to avoid additional penalties and interest, or contact the IRS if you can't. If you need time, setting up a payment plan before the due date is the cleanest way to stop the notices.

Unpaid CP501 balances move to CP503, the second reminder, and then CP504, the Notice of Intent to Levy. The IRS states on its CP501 page that if you don't pay, make arrangements or call, it can file a Notice of Federal Tax Lien — a public notice to creditors of the government's claim on your property. Liens become much more likely once your balance exceeds $10,000.

1. Find your original CP14 and compare balances.
2. Confirm the amount in your IRS Online Account.
3. Pay in full by the due date if you can.
4. Otherwise apply for a short-term plan (up to 180 days) or a Simple Payment Plan (balances of $50,000 or less).
5. If the bill is wrong, call the number on the notice with documentation.
6. If you can't pay anything, ask about Currently Not Collectible status.

Read the official IRS explanation: Understanding your CP501.

Mail gets lost, addresses change, and some people move between filing and billing. The IRS mails to the address on your last return or the one you updated with Form 8822. If you never saw the CP14, the CP501 still counts as notice. Update your address, sign in to your Online Account to see every notice issued on your account, and respond to the CP501 now — the collection timeline continues regardless.

The IRS collection notice stream follows a predictable order. Knowing where your letter sits tells you how much time you have and what the IRS is legally allowed to do next.

• CP14 — the first bill. It says you have a balance due and asks you to pay within 21 days.
• CP501 — the first reminder that the balance is still unpaid.
• CP503 — the second reminder. The IRS may file a Notice of Federal Tax Lien if it hasn't already.
• CP504 — Notice of Intent to Levy under IRC section 6331(d). The IRS can now take your state tax refund and warns that wages and bank accounts are next.
• LT11 or Letter 1058 — Final Notice of Intent to Levy and Notice of Your Right to a Hearing. You get 30 days to request a Collection Due Process hearing.

The gaps between letters are usually several weeks, but the IRS does not have to send every letter, and some accounts skip straight from CP14 to CP504. See our overview of all IRS notices for the full list.

Every notice in the sequence can be resolved with the same set of IRS programs. Which one fits depends on how much you owe and what you can realistically pay each month.

• Payment plan (installment agreement): individuals who owe $50,000 or less in combined tax, penalties and interest and have filed all returns can usually set up a Simple Payment Plan online, with no financial statement. The online setup fee is $29 with automatic withdrawals or $69 without.
• Short-term plan: if you can pay within 180 days and owe less than $100,000, there's no setup fee — interest and penalties still accrue.
• Offer in Compromise: settles for less than the full balance only when the IRS agrees you can't pay in full through income and asset equity. The application fee is $205 unless you meet the low-income certification.
• Currently Not Collectible status: pauses active collection if paying would leave you unable to cover basic living expenses.
• Penalty abatement: first-time abatement or reasonable cause can remove failure-to-file and failure-to-pay penalties, which also removes the interest charged on those penalties.

Our tax settlement calculator shows which of these your situation points toward in about a minute.

Doing nothing is the most expensive choice. Interest accrues at the federal underpayment rate — currently 7% a year, compounded daily — and the failure-to-pay penalty adds 0.5% of the unpaid tax per month, up to 25%. Once you're on an approved payment plan (and filed on time), that penalty drops to 0.25% a month. If you ignore a notice of intent to levy, it rises to 1% a month starting 10 days after the notice. Use the penalty and interest calculator to see what waiting costs on your balance.

You can handle most notices yourself by calling the number on the letter or using your IRS Online Account. Consider professional help — an enrolled agent, CPA or tax attorney — if you owe more than $50,000, have several unfiled years, run a business with payroll taxes, or are already facing a levy. If the IRS is causing you financial hardship, the free Taxpayer Advocate Service can step in. Be wary of any company that promises to settle your debt for a fraction of what you owe before reviewing your finances — read how to choose a tax relief company.