IRS Notice 5972C: What It Is and How to Respond

IRS Notice 5972C is a notice the IRS sends — typically to taxpayers living outside the United States — demanding that they pay their balance due immediately.

This notice was developed by the IRS Automated Collection System (ACS) to encourage these taxpayers to resolve their tax issue by chatting with the IRS using the “Chat Now” button at irs.gov/intl5972c.

Here is a redacted Notice 5972C that the IRS sent one of our clients living abroad.

IRS Notice 5972C At a Glance

IRS Notice 5972C Explained, Part by Part

Here’s a full explanation of the Notice 5972C, part by part.

Part One: Account Summary

At the top of the letter you’ll find your taxpayer identification number and the tax year(s) and form(s) related to this notice.

The letter begins by informing the taxpayer that there is an outstanding balance on their tax bill, and that it must be paid immediately.

There’s also mention of “possible enforcement action” if you fail to make arrangements to pay your tax bill.

These potential enforcement actions won’t happen overnight, or without further notices being sent, but nevertheless it is in your best interest to respond in some way before that happens.

The IRS notes here that they want to hear from you within 21 calendar days from the date of this letter (you’ll find the date in the top right corner).

Finally, the taxpayer’s account summary is provided, detailing the relevant tax form, year and a breakdown of the tax bill.

Part Two: What You Need to Do

The IRS states that if you can’t pay your tax bill in full, then you can use an alternative payment option to pay as much as you can.

If you’ve just recently paid your bill in full there’s a chance that this letter was issued to you just before that payment cleared in the IRS’s system, in which case you can ignore this letter.

The same applies if you’ve made payment arrangements with the IRS in the past two weeks.

If you’ve made a payment to the IRS outside of that 14 day window then it would be worth calling them to check if they’ve received your payment to ensure it hasn’t been lost.

Part Three: Payment Options

This section goes over some general information related to payment options, as referenced above.

First off, regarding payment in full, the IRS provides information on various payment methods you can use, with some encouragement to consider paying electronically rather than via mail.

Following that, the IRS provides some basic detail on your options if you can’t pay your tax bill in full, including payment plans, offers in compromise and a temporary collection delay (or CNC status).

Since the Notice 5972C is usually sent to US citizens living abroad, there’s also a note here on how to apply for a payment plan (installment agreement).

These payment options can be a fantastic route for anyone who is genuinely struggling to pay their tax bill in full, but eligibility is also not exactly black and white and a good CPA or tax attorney can help you weigh those options if necessary.

Part Four: If You Don’t Respond

If you don’t respond to the IRS (within 21 calendar days, as we’ve seen above) then your account may be subject to collection actions, such as tax lien, levy/seizure of assets, or taking your future tax refunds and putting them toward paying off your bill.

Whatever it may be, you don’t want the IRS to move in any of those directions, so the most important thing to do is to respond promptly, above all else.

It’s also difficult to know just how likely any of these scenarios are without knowing the full context of your specific tax case.

Nevertheless, it’s in your interest to avoid any potential escalations by paying the bill, or contacting the IRS to make alternative payment arrangements.

Part Five: General Information on Penalties

The next part of the Notice 5972C presents general information on penalties and interest, with a note here on how to find out more information about how penalties and interest on your account have been calculated.

Part Six: Failure to File & Failure to Pay Penalties

The next section provides some general detail on how both the Failure to File and Failure to Pay penalties are calculated.

Essentially, the Failure to File penalty (charged at 5%) is less than the Failure to Pay penalty (charged at 0.5%) so if you’re being charged for both it’s usually a good move to submit your tax return late and at least stop the Failure to File penalty being charged.

If both penalties are applicable to your account at the same time, then the Failure to File penalty will be reduced by whatever amount you’re being charged for the Failure to Pay penalty.

If your tax return is over 60 days late, then you’re getting into territory where you are subject to a minimum late filing penalty, and that’s going to be either 100% of your tax bill (instead of the general maximum of 25%) OR a specific dollar amount adjusted for inflation each year—whichever value is lower.

The IRS also reminds you here that even if you file on time, you can still be charged a penalty for not paying on time, and that’s generally taken from the original due date of the return, without extensions.

If you’ve filed on time but are being charged a late payment penalty, having an approved installment agreement will reduce the Failure to Pay penalty from 0.5% to 0.25% per month, as long as your IA remains active.

Part Seven: Interest

Moving on, the IRS here provides some general detail regarding interest charges.

When your tax liability is outstanding (i.e. not paid on time) then the IRS is legally required to charge interest on your total tax bill.

Interest is calculated against your account from the date your tax return was due, until the amount is paid in full.

Interest rates are variable, meaning they will change according to the official rates decided by the Federal Reserve, which are subject to inflation and economic policy.

The IRS calculates the interest rates they use by taking the short-term federal rate and adding 3% on top.

The IRS updates the interest rates it uses to charge taxpayers four times per year, and you can find the current IRS interest rates online.

Part Eight: Taxpayer Advocate Service

Here the IRS provides information regarding the Taxpayer Advocate Service (TAS).

TAS can be a helpful resource for qualifying taxpayers who are suffering financially due to their tax bill, or otherwise having difficulty in resolving their tax debt issues.

Part Nine: Contacting the IRS

Contacting the IRS from outside of the USA can be done online, over the phone, or by mail.

As we’ve mentioned, this letter is typically sent by ACS to US citizens residing outside of the United States, so if you do choose to communicate by mail the IRS recommends giving them notice of the hours that you’re available to speak over the phone.

Part Ten: IRS Signature

Because this letter comes from ACS, it’s signed by the ACS operation manager, rather than a specific IRS agent.

Right now there’s no IRS agent assigned to your case, and the IRS is trying to handle your case through ACS.

Part Eleven: Inquiry & Payment Vouchers

Attached to the bottom of Notice 5972C are two vouchers, one used for inquiries and the other used only for payments.

If you wish to make an inquiry regarding this Notice and/or your tax bill, you can attach this voucher to your letter in the event that you decide to write to the IRS.

Below that is the voucher for payments only, which is to be attached to mailed in payments to the IRS.

When the IRS Sends Notice 5972C

The IRS sends Notice 5972C to taxpayers outside of the US who have an outstanding tax bill. This generally involves unfiled tax returns and/or unpaid taxes.

If you receive a Notice 5972C, you can pay the balance in full, contact the IRS to discuss alternative payment options that are applicable to you, or contact your tax attorney to discern any other potential options you might have.

What You Should Do If You Receive a Notice 5972C

If you receive a Notice 5972C from the IRS, here are your next steps:

1. Review the Notice Thoroughly

It’s vital that you take the time you need to read this notice thoroughly.

Make sure you understand each section, and maybe take some notes if any parts of it are unclear or confusing to you.

You can contact the IRS for more information, or speak to your tax lawyer if you’re not sure about any elements of the letter.

A thorough review of your notice will give you a good foundation moving forward, so be sure not to miss any details.

2. Retrieve Penalties Information

The IRS does make mistakes from time to time, and although this notice was sent by ACS there could still potentially be errors.

That’s why it’s important to compare the information given in the notice (particularly the account summary) with whatever financial and tax records you have yourself.

Because there is no information specific to your account regarding penalties and interest in this letter, you might want to get that information from the IRS if you don’t already have it.

3. Consider Your Payment Options

Depending on the size of your tax liability, and your own financial circumstances, you may just decide it’s easier to go ahead and pay the bill in full.

However, if you disagree with the adjustment and/or total tax bill, or paying in full is otherwise not an attractive option for you, then you can and should consider alternate payment methods.

Installment Agreement (IA), Offer in Compromise (OIC) and Currently Not Collectible status (CNC) are all common potentials for those who can’t pay their tax bill in full.

Your tax attorney, CPA, EA etc can help you first of all determine which options are viable and optimal for you, and then help you take the steps toward that by communicating with the IRS on your behalf.

4. Respond ASAP

Once you’re sure you understand the notice and you’ve considered your options moving forward, it’s vital that your next step is to respond to the IRS in one way or another.

Remember you’ve got 21 calendar days, from the date the notice was issued, to contact the IRS about your tax bill.

If the IRS doesn’t hear from you within that time frame, no matter what your intentions are, they will move on to the next stage of their collections process, which could be a serious escalation towards the seizure of your assets.

5. Consult a Professional

If you’re feeling unsure about how to respond to your Notice 5972C, or if you’re not making progress in handling it yourself, consider finding a qualified tax professional to help you out.

A CPA, EA or tax attorney can bring some clarity to your case and help you discern the best way forward towards resolution of your tax debt.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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