Notice CP 89: this is not a bill.

• Author: Chambers, Valrie
• Position: Annual tax installment agreement statement

The IRS CP 89, Annual Installment Agreement Statement, is not a "bill." If the taxpayer has entered into an installment agreement to make monthly payments for past due tax liabilities or has paid off the liability in the last 12 months, he or she will receive this notice.

Regs. Sec. 301.6159-1(i) requires the IRS to send every taxpayer on an installment agreement an annual statement that identifies the balance owed at the beginning of the year, the payments made during the year, and the remaining balance at the end of the year. Congress believed that taxpayers who entered into an installment agreement should be kept informed of amounts applied to the outstanding tax liability and amounts remaining due (S. Rep't No. 105-174, 105th Cong., 2d Sess., p.98 (April 22, 1998)).

The notice was first mailed to taxpayers in 2001. The IRS sent CP 89 notices to more than 5 million taxpayers in 2001 and more than 7 million taxpayers in 2012. The Wage and Investment business operating division produces and mails the notice. The cost to send the notice to the taxpayer is less than 45 cents.

Tax practitioners listed on the taxpayer's signed Form 2848, Power of Attorney and Declaration of Representative, will also receive the CP 89 notice for the periods they are authorized to represent the taxpayer. All taxpayers, both individuals and businesses, receive the annual statement. The law does not state when they have to be mailed; it simply requires an annual statement. The taxpayer and the holder of the power of attorney usually receive the notice between August and October.

The rest of this item explains the notice, the different parts of the mailing, and the benefits and concerns for the tax professional.

CP 89

The headlines of the notice are in large bold print:

THIS IS NOT A BILL Annual Installment Agreement Statement THIS IS FOR YOUR INFORMATION The IRS wants to alert recipients who have completed or are current with payments on their existing installment agreement that this is not another bill but that it is important and should be retained with other tax documents. In the upper-right corner of the notice is the notice number, notice date, taxpayer identification number, and a phone number to contact the IRS if there are any questions. The opening paragraph states the fiscal year for each tax period included in the taxpayer's installment agreement plan that will be recapped in the statement (e.g., July 1, 2013, to June 30, 2014).

The first part of the...