The IRS CP42 notice is the second bill the Internal Revenue Service sends to taxpayers who have not responded to or paid their initial tax bill (typically a CP14 notice). This notice serves as an urgent reminder that your tax debt remains unpaid and that the IRS is preparing to take more aggressive collection actions if you don't respond promptly.

Key Features of the CP42 Notice:

• Second official demand for payment
• Updated balance including additional penalties and interest
• Shortened payment deadline (usually 10 days)
• Warning of future collection actions
• Clear payment instructions and options
• Escalated tone indicating urgency

You received a CP42 notice because:

Primary Reason:
You failed to respond to or pay a previous IRS notice (such as CP14, CP14H, or similar balance due notice)

Contributing Factors:

• Ignored previous notices hoping they would go away
• Made insufficient payment on your original tax debt
• Set up a payment plan that you failed to maintain
• Disputed the original notice without proper documentation
• Attempted payment failed due to insufficient funds or bank errors

The CP42 notice represents a significant escalation in the IRS collection process:

Increased Urgency

• More direct language about consequences
• Clearer warnings about collection actions
• Shorter timeline for response

Higher Total Balance

• Additional penalties for continued non-payment
• Accumulated interest since the last notice
• Possible assessment of failure-to-pay penalties

Formal Collection Process

• Documentation for IRS collection file
• Establishes grounds for future enforcement actions
• Creates paper trail for potential liens and levies

Notice Header

• Date issued and notice number
• Tax period the debt covers
• Your taxpayer identification number

Amount Due Section

• Previous balance from earlier notice
• Payments and credits applied (if any)
• Additional penalties assessed
• Interest charges through notice date
• Current total balance due

Payment Instructions

• Payment due date (typically 10 days)
• Payment options available
• Where to send payments
• Online payment information

Contact Information

• IRS phone number for questions
• Taxpayer Advocate Service information
• Mailing addresses for correspondence

Immediate Steps (Within 24-48 Hours)

1. Verify Your Records

• Compare the CP42 with your tax records
• Check for any payments made since the last notice
• Ensure all information is accurate

2. Calculate Current Interest and Penalties

• Understand how much additional charges have accrued
• Project future costs if payment is delayed further

3. Assess Your Financial Situation

• Determine if you can pay in full immediately
• Evaluate your ability to make partial payment
• Consider your options for payment arrangements

Response Options (Within 10 Days)

Option 1: Full Payment
Best if: You have access to the full amount owed
Benefits:
• Immediately stops all penalty and interest accrual
• Completely resolves the tax debt
• Prevents any collection actions
• Restores your good standing with the IRS

Option 2: Partial Payment with Arrangement
Best if: You can make a substantial payment but need time for the balance
Process:
• Pay as much as possible immediately
• Contact the IRS to arrange payment plan for remainder
• Reduces overall penalty and interest charges

Option 3: Installment Agreement
Best if: You need to make monthly payments over time
Types:
• Guaranteed installment agreement (balance under $10,000)
• Streamlined agreement (balance under $50,000)
• Non-streamlined agreement (requires financial disclosure)

Option 4: Financial Hardship Relief
Best if: You cannot afford any payment due to genuine hardship
Options:
• Currently Not Collectible status
• Offer in Compromise
• Partial payment installment agreement

Ignoring a CP42 notice triggers the next phase of IRS collection actions:

Within 30 Days:

• CP501 Notice (first collection notice)
• Additional penalties and interest
• Preparation for enforcement actions

Within 60-90 Days:

• CP503 Notice (second collection notice)
• CP504 Notice (intent to levy)
• Notice of Federal Tax Lien filing

Beyond 90 Days:

• Bank levies and asset seizure
• Wage garnishment
• Property seizure
• Professional license issues

Common Penalties on CP42 Notices:

• Failure-to-Pay Penalty: 0.5% per month of unpaid tax
• Interest: Daily compounding on both tax and penalties
• Additional penalties may apply based on specific circumstances

Monthly Cost Example:
If you owe $10,000:
• Failure-to-pay penalty: $50 per month
• Interest (approximately 6% annually): $50 per month
• Total monthly increase: ~$100