Understanding Your CP173 Notice
You received this notice because, according to our calculations, you did not prepay enough of your tax through estimated tax payments, or your estimated tax payments were not made on time. This notice informs you of the penalty we assessed for failure to make sufficient timely estimated tax payments.
What you need to do
- If you agree with our calculation, the amount shown due in the notice must be paid by the due date in the notice in order to avoid additional charges.
You may want to...
- Review Form 2220 to see if any of the exceptions for computing the penalty apply to you. If any of the exceptions apply, you may be able to lower or eliminate the penalty by computing the penalty and following the instructions for the given exception.
Answers to Common Questions
- If an exception on Form 2220 applies, and results in a lower penalty, you can ask to have the penalty adjusted. Mail the completed Form 2220, with a signed statement attesting to its accuracy, to the address listed on the payment stub of the notice. Include your payment for any penalty you computed on Form 2220. If you have a way to fax Form 2220 and your statement, you can call 1-800-829-0115 to speak to an assistor. The assistor will provide you with a fax number where you can fax the documents. Please note that you will need to remain on the phone with the assistor while faxing the documents.
- The penalty cannot be removed or reduced for reasonable cause. However, the penalty can be removed or reduced to the extent that it is directly attributable to erroneous written advice given by an IRS employee in the performance of his or her duty. Additionally, both of the following criteria must be met:
- The advice was in direct response to a written request for advice.
- The erroneous advice was not the result of material omissions or misinformation in the written request for advice.
If you believe that you qualify for a removal or reduction of the penalty because of erroneous written advice, you must mail a statement to the IRS, signed under penalty of perjury, outlining how the erroneous advice resulted in the penalty. You must include with the statement a copy of both the written request for advice, and a copy of the written advice you received in response to your request.
Tips for next year
To avoid a similar penalty next year, make sure that you make sufficient timely estimated tax payments so that you have paid the lesser of 100% of this year’s tax, or 100% of next year’s tax, in four equal payments.