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CP94 Notice: A Court’s Restitution Order

Posted by Brandon Keim | Jun 21, 2024 | 0 Comments

A taxpayer will receive a CP94 notice after a court orders them to pay an amount of restitution. The amount due is determined by what the court ordered the taxpayer to pay.

What to Do After Receiving a CP94 Notice

Unlike other notices, a CP94 Notice involves a third party and doesn't allow for appeals to the IRS. What a taxpayer can do after receiving a CP94 Notice:

  •         Pay the amount due to the court
  •         If unable to pay the full amount, pay according to the court-ordered payment schedule

Taxpayers should include a copy of their CP94 notice when making any payments. 

If applicable, a taxpayer's restitution payments may be credited against outstanding civil tax liability. To be credited, the payments must apply to the same tax periods. Taxpayers should only pay once for any underlying tax liability.

Even if unable to pay the full amount, taxpayers may want to pay more than required by the court-ordered payment schedule. This can reduce how much the taxpayer will pay in interest and penalty charges. 

What Happens if a Taxpayer Doesn't Meet Payment Dates

If a taxpayer fails to pay, a court may take additional action against that taxpayer. Among other options, a court may extend a taxpayer's probation.

Paying Interest and Penalties on Restitution-Based Assessments

A taxpayer may have to pay interest. This will occur when a court order or the restitution includes interest. Taxpayers may be responsible for paying other penalties and fees. This may include a prior balance or a failure to pay. 

A CP94 Notice should include a listing of all applicable penalties and the amount related to each penalty. Penalties may include fraud or failure to pay.

Removing or Reducing Penalties

The IRS may reduce or remove penalties related to restitution-based assessments. The IRS allows a taxpayer to request a removal or reduction after certain life events, such as serious injury or illness, or the loss of financial records due to a natural disaster.

The taxpayer would need to explain, for each charge, why they believe the penalty should be removed or reduced and provide documents that support their request. They must also identify each penalty charge they wish to be considered. 

A taxpayer may also request a removal or reduction if the penalty stems from receiving incorrect advice from the IRS. A request must show that:

  •         The taxpayer provided the IRS with accurate and adequate information 
  •         Based on that information, the IRS provided written advice to the taxpayer
  •         The taxpayer reasonably relied on that advice and was penalized as a result

If you need help, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.

About the Author

Brandon Keim

A Certified Tax Law Specialist, CPA, partner at Frazer Ryan Goldberg & Arnold LLP, and former Senior IRS Trial Attorney, Brandon Keim holds an LL.M. in Taxation from Georgetown University Law Center.


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