CP160 Notice: A Yearly Reminder That Your Business Still Owes the IRS

What a CP160 says

The IRS CP160 page says, “This notice reminds you that you still have a balance due and it requires your immediate attention.” The notice explains how the IRS calculated the amount and lists the payments it applied to your account.

IRM 21.3.1.7.18 names it the “Business (BMF) Balance Due - Annual Reminder Notice.” BMF means the IRS’s business master file, so this is a business account notice. The page’s reference list fits that: it points to Publication 15, Publication 542 and Publication 598.

Why you got a reminder

IRM 21.3.1.7.18 says the IRS sends a CP160 “to remind taxpayer of a balance due on a deferred account (status 23).” The debt stays on the account.

A federal law sits behind reminders like this. IRC 7524 says that “not less often than annually,” the IRS must send a written notice to each taxpayer with a tax delinquent account.

So a CP160 does not, on its face, mean the IRS found something new. It tells you the debt still exists and shows today’s amount. Compare that amount with your last notice. Interest and penalties can make it higher even if you added no new tax.

What to check first

The IRS page gives three checks. Read how the IRS calculated the amount. Compare the figures with your return. Then check the list of payments to see whether the IRS applied all the payments you made.

If you made a payment and it does not appear, gather the canceled check or bank record. IRM 21.3.1.7.18 tells IRS staff to research a payment that did not reach the account.

If you disagree, the page says to call the toll-free number on your notice: “Have your documentation such as cancelled checks, amended return, etc. ready when you call.”

What it costs to wait

The page says the IRS won’t charge additional interest “if you pay the full amount you owe by the payment due date found on the notice.” After that date, “interest will continue to increase on the unpaid balance.”

Penalties continue too. Asked whether a business that can’t pay in full gets a penalty, the page answers, “Yes. You’ll receive a late payment or failure to deposit penalty, depending on what you owe.”

If you can’t pay in full, request a payment plan. The page says to call the toll-free number on your notice to discuss payment options. It also lists offers in compromise and a temporary delay on collection.

What people mistake a CP160 for

Many owners read it as the first bill for a new tax. That first notice is usually a CP161, which IRM 21.3.1.7.19 calls a “first notice” on a business return with a balance due and no math errors. A CP160 reminds you of a balance the IRS already has on its books.

Others treat it as a final warning before a levy. The IRS page describes a reminder. It does not say the IRS intends to levy. Those warnings come in other notices, such as a Final Notice of Intent to Levy, and they carry their own hearing rights.

The opposite mistake costs more: filing it away because the debt feels old. The balance still grows, and the page lists “How a tax lien affects you” among its topics.

Individuals get a similar yearly reminder, the CP71. If your notice shows a personal account, use that page.

For tax professionals

The IRM’s call table in 21.3.1.7.18 has four rows. If the taxpayer agrees with the notice and the financial status has not changed, “No action is necessary.” That line tells IRS staff how to treat the call. It does not cancel the page’s request to pay by the date on the notice, so do not quote it to a client as advice to ignore the notice.

A change in financial status matters more. If the business can pay now, IRM 21.3.1.7.18 has staff verify the payoff. If it disagrees and provides information, staff research the account, explain the balance and adjust the account if appropriate.

Pull the account transcript before you call, and check the collection statute on each period with our CSED estimator.

Common Questions