Understanding your CP166 Notice
We were unable to process your monthly payment because there were insufficient funds in your bank account.
What you need to do
- Make sure there’s enough money in your bank account to cover your monthly payment with us, plus any additional fees or penalty charges from your bank.
Answers to Common Questions
I sent my monthly payment in the mail this month. Why did the IRS attempt to debit my account?
Once you establish a Direct Debit Installment Agreement (DDIA), you have agreed to the IRS debiting the fixed payment on the established date every month. Unless you made other arrangements, your payment plan is by DDIA, so even if you mailed in a payment, we’ll still attempt to withdraw your monthly payment from your account.
I mailed the IRS my updated checking account information, but you tried to take the money out of my old account. How do I make sure you have the right account information?
If you think we haven’t updated your account information timely or accurately, please contact us at the toll free number on your notice to verify that we have the correct information on your Direct Debit Installment Agreement (DDIA). If your bank charged you a fee because we attempted to debit your old account, you will have to contact your bank for them to waive any fees they charged. Their fees are independent of any charges from the IRS.
I’m sure I had enough money in my account. Why did the bank tell you there were insufficient funds?
You’ll have to contact your bank to clarify the situation. In addition, if your installment agreement is now in default and you believe you had sufficient funds in your bank account on the payment due date, please write to the address shown on your notice. Be sure to include a signed statement of explanation along with proof you had sufficient funds. The lower portion of your notice must accompany any correspondence you send us.
How do I change my monthly payment date on my direct debit installment agreement?
Please call the toll-free number on your notice.
The notice I received mentioned that "interest may increase" if there are insufficient funds in my bank account. What’s the current interest, and how much will it increase?
Interest is charged on any unpaid balances on your account, so as long as you owe money, interest is charged and added to your account balance(s). The interest amount you owe on your unpaid balance will increase, but not the interest rate.
The rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
Tips for next year
Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.