What these notices mean
CP71H and CP501H are about one specific debt: an unpaid Affordable Care Act shared responsibility payment, often called the SRP. It is the amount assessed for not having minimum essential health coverage for yourself or your household, without an exemption, under IRC 5000A.
CP501H notifies you of the unpaid balance and asks you to pay by the due date. CP71H is the annual reminder. IRM 21.3.1.6.33.4 describes CP71H as issued once a year on these Affordable Care Act accounts to remind you of a balance due.
Both point to the same old debt. This guide covers both.
Why you are still being billed
The IRS explains that under the Tax Cuts and Jobs Act, the individual shared responsibility payment was reduced to zero for months beginning after December 31, 2018. That ended new SRP assessments. It did not erase balances for earlier years. The IRS says it is still required to collect unpaid SRP amounts for years when you or your dependents did not have minimum essential coverage.
So if your notice shows a year before 2019, the balance is real until it is paid or otherwise resolved.
What the IRS cannot do
This is the part most people never hear. Congress put unusual limits on how the IRS can collect this particular debt. IRC 5000A(g)(2) says, notwithstanding any other law:
- You are not subject to criminal prosecution or penalty for failing to timely pay it.
- The IRS shall not file a notice of federal tax lien because of the failure to pay it.
- The IRS shall not levy on your property because of the failure to pay it.
The IRS repeats this on its CP71H and CP501H pages: the law prohibits it from using liens or levies to collect the SRP.
No lien. No levy. That is the law. But it is still a debt, and the IRS still has a way to collect it.
What the IRS can do
The IRS says it may offset the SRP against a tax refund you are due. IRC 6402(a) gives the IRS authority to credit an overpayment against other federal tax liabilities before refunding the rest. If you expect a refund and still owe an SRP, expect part or all of the refund to disappear into the old balance.
Interest also keeps running. The IRS page for CP501H says it is required by law to charge interest when a liability is not paid on time, that interest accumulates daily, and that unlike penalties, interest cannot be reduced or removed for reasonable cause.
The IRS says penalties do not apply to the SRP, and the CP71H page says you will not receive a penalty for being unable to pay the full amount.
What to do now
- Confirm the year. Make sure the balance is for a year before 2019 and that it is yours.
- Check whether you actually had coverage. If you had coverage or qualified for an exemption for the months assessed, gather proof: insurance cards, Forms 1095, or exemption documentation.
- If you agree: pay online for instant confirmation, or mail a payment with the bottom part of the notice.
- If you cannot pay all at once: the IRS says you can apply for a payment plan. A partial payment now reduces interest.
- If you disagree or already fixed it: call the number on your notice. The IRS says to call even if you already took corrective action, so it can confirm its records.
Other options the IRS mentions
The IRS page for CP501H lists an offer in compromise, which may allow some taxpayers to settle a tax debt for less than the full amount, and a temporary collection delay for taxpayers in financial hardship. The CP71H page lists the same options. Whether they make sense for an SRP balance depends on what else you owe and your finances overall.
Paid recently?
The IRS says payments can take up to 21 days to post. If you paid in full within the last 21 days, you can disregard the CP71H. If you have an approved installment agreement, keep paying under it.
If you need to correct the return
If the SRP was calculated from an error on your return for that year, such as a coverage month you forgot to report, the IRS says you'll need to file Form 1040-X. Include the coverage documents that support the change.
If you had coverage the IRS did not count
An SRP was assessed because the return for that year showed months without minimum essential coverage and no exemption, or because the IRS adjusted the return. If you actually had coverage, the documents that prove it are the health coverage forms issued for that year, such as Forms 1095-A, 1095-B, or 1095-C, or your insurer's or employer's records. If you qualified for an exemption you did not claim, gather the proof of that too. Then call the number on the notice, and be ready to file Form 1040-X if the IRS tells you an amended return is needed.
Plan around the refund offset
Because the IRS cannot levy or file a lien for this debt, the refund offset is its main collection tool. If you expect a refund next year and you still owe the SRP, budget as if part of the refund will not arrive. Paying the SRP before you file means the full refund comes to you instead of to the old balance.
What not to do
Do not panic about a bank levy over this balance. The statute does not allow one.
Do not ignore it because it cannot be levied. Refund offsets will take it, and interest grows until then.
Do not pay anyone other than the IRS. Use IRS.gov payment options or the envelope that came with the notice.
The law behind CP71H and CP501H
IRC 5000A imposed the shared responsibility payment. IRC 5000A(g)(2) bars criminal penalties, liens, and levies for failure to pay it. IRC 6402 allows the IRS to offset refunds. IRM 21.3.1.6.33.4 describes CP71H as the annual balance due reminder for these accounts. Publication 5187 is the IRS's general guide to the Affordable Care Act for families.
If an old SRP balance is eating your refunds and you want to sort out what you really owe, call us at (813) 229-7100.