A penalty notice after a late return is a bill, and its dates run from the notice date, not from the day it lands on a UK doormat. Check the arithmetic first, then choose the relief route according to how that year was filed. Someone catching up on several years will usually fail the first-time abatement test, because that test looks back at the very years that were late.
This post is for US citizens and green card holders in the UK who have filed late and then received a CP14 or similar balance notice showing a penalty. It goes further than our guide for people behind on US taxes in the UK on what comes after filing. Notices asking why a return is missing are a different matter, covered in our post on Streamlined after an IRS letter. Here we cover reading the notice, replying from Britain, each relief route, and a penalty after a Streamlined package.
What does an IRS penalty notice after late filing tell you
It tells you what the IRS says is unpaid, for which year, and how that balance was built up. The notice number sits in the corner of the first page. The tax, the penalties and the interest are separate figures, and each can be checked against your own return.
The CP14 page (opens the official IRS page in a new tab) says the notice is sent because money is owed on unpaid taxes. The CP161 page (opens the official IRS page in a new tab) describes a notice of an unpaid balance that explains the calculation, and asks you to compare its figures with your return and confirm that every payment has been applied. A payment sent from a UK bank but not yet applied is one thing to rule out early.
Two different penalties tend to appear. The failure to file penalty (opens the official IRS page in a new tab) is a percentage of the unpaid tax for each month or part month the return is late, up to a cap. A fixed minimum applies once a return is more than a set period late. The failure to pay penalty (opens the official IRS page in a new tab) is a much smaller monthly percentage that continues after the first has reached its cap. In any month when both apply, the first is reduced by the second.
People abroad should also look at the start date. Publication 54 (opens the official IRS page in a new tab) says late payment penalties for those covered by the automatic extension run from the extended payment date of 15 June, while interest runs from 15 April. The extension is claimed by attaching a statement to the Form 1040, so check that your copy carried one.
How long do you have to reply from the UK
Until the date printed on the notice. We found no IRS statement giving UK residents extra time on a CP14 or CP161 because post is slow, so plan on the printed dates.
The windows are short. The CP161 page asks you to contact the IRS within days of the notice date if you think it has made a mistake, and to pay by the date on the notice to avoid further interest. The IRS guide to understanding your notice or letter (opens the official IRS page in a new tab) says to reply by the due date to protect your appeal rights. Write down the day the notice reached you.
Speed comes from not relying on post alone. Our post on using an IRS online account from the UK explains how to get access, and certain notices can be read there. The IRS international contact page (opens the official IRS page in a new tab) lists a call centre for people abroad, which is not toll-free. The IRS says it will tell you during the call whether a phone request is approved. A written reply can follow by tracked courier.
Silence has a cost that grows. The failure to pay penalty rate rises after a notice of intent to levy, and the CP504 page (opens the official IRS page in a new tab) describes that notice as the final reminder before collection starts. Paying the undisputed part stops interest on that part while you argue the rest.
Why first-time abatement rarely helps a catch-up filer
Because it rewards a clean history, and a catch-up filer has none yet. The IRS test asks whether the same type of return was filed on time for the prior three years, with no penalties other than estimated tax charged, or only those later removed. Several late years fail that on their face.
The administrative relief page (opens the official IRS page in a new tab) says a request can be made by phone or in writing, with no need to name the relief or attach documents, because the IRS reviews the account itself. It is worth asking where the history may pass, such as after one missed return in a reliable record. It covers failure to file and failure to pay penalties.
The newer Automatic Exemption from Penalty, starting in summer 2026 for 2025 returns onward, uses the same kind of look-back and is applied when an original return finishes processing. A person who posted a catch-up package in 2026 will not pass it on later years until enough on-time years have built up, which is one more reason our individual tax returns work keeps the next year on time.
When does reasonable cause fit a late filer abroad
When ordinary care and prudence were used and the return or payment still could not be made on time. The reasonable cause page (opens the official IRS page in a new tab) decides this case by case. Living in the UK is not listed as a reason, so the claim rests on what actually stopped you.
The listed examples are fire or natural disaster, inability to get records, death, serious illness or unavoidable absence of the taxpayer or close family, and system problems that delayed timely electronic filing. The same page says lack of knowledge of the filing rules generally does not qualify, nor does reliance on a professional, and that lack of funds alone is not enough. An accidental American who says only that nobody told them faces a hard argument.
The written account should explain what happened and when, how it prevented filing or payment, and what you tried, with evidence such as hospital letters. Where a phone request cannot be approved, the route is Form 843 (opens the official IRS page in a new tab). The Form 843 instructions (opens the official IRS page in a new tab) say to send it to the return address on the notice where you are answering one, and give a refund window for a penalty already paid of three years from filing or two years from payment, whichever is later.
What if the penalty follows a Streamlined filing
Identify the year first. On the Foreign route, the IRS says an eligible filer who follows the instructions will not be subject to failure to file or failure to pay penalties. A charge on one of those returns needs a different answer from a charge on a year outside the package.
The words come from the page for taxpayers residing outside the United States (opens the official IRS page in a new tab). That page also says a missing or deficient certification, or failing to follow the instructions, means returns are processed in the normal course without the favourable terms. It calls the red marking on each return critical to routing. A return that lost its marking, or a package missing a certification copy, may therefore explain a charge. The Domestic route (opens the official IRS page in a new tab) carries its own 5% offshore penalty and is not covered by this reasoning. We found no IRS procedure written for this exact notice, so the reply is built from the normal steps.
Our post on what happens after you submit covers the balance notice caused by interest worked to a different date, which is ordinary. A penalty line is what deserves the extra look. The FBAR is filed with FinCEN and its penalties sit under a different statute, so they are a separate question.
- Streamlined year, package complete: answer with a copy of the certification and proof of posting
- Streamlined year, marking or certification faulty: take advice before replying, as the favourable terms may be in doubt
- Penalty already assessed before the package: the IRS says it will not be abated by the procedure
- Year filed late outside the package: first-time abatement if the history passes, otherwise reasonable cause
- Extra tax found on a Streamlined return: the IRS may assert penalties on that new amount
How might this look for a doctor in Cardiff
A US citizen working as a hospital doctor in Cardiff posts a marked Streamlined Foreign Offshore package in February 2026, covering 2022, 2023 and 2024, with the tax and interest paid by wire. A CP14 dated 3 September arrives on 19 September, sixteen days later. It shows a failure to file line on the 2023 return.
She reads the notice online the same evening and confirms that her wire appears in the payment history, then checks her transcript (opens the official IRS page in a new tab). Her file holds the marked return, the certification copy and the courier receipt. The next morning she calls the international line, with the notice open, and asks for the penalty to be reviewed. Our IRS representation service can make that call under Form 2848. A written reply follows by tracked courier to the notice's return address.
Now change one fact. Suppose her 2025 return, extended to 15 October, goes in three weeks after that date. That year sits outside the package and under regular procedures, so the Streamlined wording does not help. Her 2022 to 2024 returns were all late, so the history test fails. Only reasonable cause is left, and three busy weeks at a hospital sit poorly with the IRS examples. Any penalty is measured on tax unpaid, so if her UK tax credits cover the bill it may be small.
What should go into your reply to the notice
One clear request and the evidence for it. Say which notice and year you are answering, what you think is wrong, and what you are asking the IRS to do. Keep to facts you can prove.
Consistency matters more for a Streamlined filer. A reasonable cause statement that gives a different account of why the returns were late from the signed non-wilful narrative can create a problem bigger than the penalty. Our IRS streamlined filing service works from one file for both. If the tax itself was wrong, the fix is a Form 1040-X, since the Form 843 instructions say not to use that form for an income tax refund.
A refusal is not the end. The penalty appeal page (opens the official IRS page in a new tab) says Appeals can review a failure to file or failure to pay penalty after a written request has been denied and a letter explaining appeal rights has been issued, and it defers to the deadline in that letter. Our guide to Streamlined filing from the UK sets out the wider sequence, and you can contact US UK Tax Returns with your notice.
- Top page of the notice, with its number, date and tax year
- Proof of payment, with the bank's wire confirmation
- Proof of posting for the return, and the date it was sent
- For Streamlined years, the marked return and the Form 14653 copy
- For reasonable cause, the dated account and supporting documents
General information, not advice. The right answer depends on your circumstances and the tax year concerned.
