Redesigned collection notices empower taxpayers and increase payment compliance

Learn about the features of the newly designed IRS collection letters - Simplified language, topics grouped into specific sections and self-help options that allow more taxpayers to resolve their account issues themselves.

Get to know the IRS, its people and the issues that affect taxpayers

By Darren Guillot
CL-21-20, July 1, 2021

As part of our commitment to putting taxpayers first, we are always looking for ways to continuously improve service in every aspect of tax administration. In previous “A Closer Look” articles, we’ve talked about improvements such as electronic signatures and multilingual forms and webpages, and today, I’d like to give you a closer look at our recent enhancement to collection notices.

When taxpayers get a collection notice, they might need to call us with questions or need additional information. That’s a time burden for the taxpayer that we wanted to reduce. Our vision for the newly designed letters was to simplify the language, group topics into specific sections, and provide self-help options so that more taxpayers could  resolve their account issues themselves rather than having to call the IRS.

One such innovation started because of a visit to the US Post Office in 2019. Noting their QR code on a receipt, we asked “why can’t we add these scannable codes to our notices to taxpayers?” Our Small Business/Self-Employed division’s (SB/SE) Collection organization had already partnered with our Research, Analysis & Applied Statistics (RAAS) group to assess the current collection notices and redesign new ones, and we shared our suggestion to insert Quick Response (QR) codes in compliance notices. As a result, for the first time, we’ve enabled taxpayers to use their smartphone to scan and access online resources to help resolve their tax issues. The QR codes offer taxpayers convenient access to pages on IRS.gov to create or log in to their online account, apply for a payment plan through Online Payment Agreement (OPA), or contact the Taxpayer Advocate Service. Our desired result was for the redesigned notices to improve the taxpayer experience, reduce cost to the IRS (by promoting self-service options), and increase case resolutions such as payment in full and installment agreements.

To test the effectiveness of the new notices, we conducted randomized control trials to compare the outcomes of the new designs to the existing versions of the notices. To date, we have completed pilot tests on five different Collection notices (including the LT16, LT11, CP14, and CP501/CP503). While each of the notices tested differently during the pilot tests, all of them showed increases in payment compliance, use of self-service tools, and rates of installment agreements being established, as well as reduced cost per case resolution. All of this was accomplished with minimal effect on the volume of incoming phone calls.

By emphasizing the availability of self-service channels, we're helping to empower taxpayers to resolve their outstanding tax issues through their preferred channel. Our pilot tests have shown that the redesigned notices increased the use of online service channels by more than 70 percent. From the release of the CP14 notice in October 2020 through April 2021, QR codes were scanned roughly 287,500 times to view IRS.gov web pages. The most commonly scanned QR code was the "View Your Tax Account" landing page, at approximately 236,200 scans.

Status of redesigned notices

The notices Collection has redesigned include:

• CP14 - Balance Due
• ACS Letter LT16 - Please Call Us About Your Overdue Taxes or Tax Return
• CP501 - Individual Balance Due, First Notice
• CP503 - Individual Balance Due, Second Notice
• CP504 - Final Balance Due Notice, Intent to Levy 
• ACS Letter LT11 - Final Notice and Notice of Intent to Levy and Your Notice of a Right to a Hearing
• ACS Letter LT17 - Please Take Action on your Balance Due Using our Online Services
• ACS Letter LT19 - Pay Your Outstanding Tax Returns

All the notices now have simplified language to direct taxpayers to self-help options on IRS.gov. QR codes in the notices take the taxpayer directly to the Online Payment Agreement application or to set up their tax account online. We put the CP Notices, LT17 and LT19 letters into production in January 2021. The LT11 and LT16 letters are also in production and will be issued to taxpayers with a balance due.

The Collection organization created a new notice called CP14IA "Installment Agreement (IA) Accounts." The CP14IA is for taxpayers who established a pre-assessed payment plan. The CP14IA will be sent to taxpayers in lieu of the standard CP14 to improve taxpayer understanding of the process and reduce the volume of phone calls. The taxpayer has direct access to online channels to view their tax account or adjust their agreement through the QR codes embedded in the notice. We placed the CP14IA notice into production in January 2021.

Next steps

While I’m pleased with the success we’ve seen so far with this effort, we know we have more work to do. We will use best practices and lessons learned from the redesign to continue updating additional notices. We want to provide taxpayers with concise information to understand the nature of their tax issue, explain the next steps they need to take, and promote the availability of service channels.

As part of our agency’s commitment to providing outstanding service to taxpayers, I look forward to continued success in providing enhancements that help them meet their tax requirements more efficiently.

Darren Guillot
Commissioner, Small Business/Self-Employed Division, Collection