What a CP15 Notice Is, and Why It Arrived
CP15 is the IRS's Notice of Penalty Charge, and the first thing to understand is what has already happened: the penalty on it has been assessed. This is not a proposal, an audit letter, or an invitation to discuss. A computer posted a penalty to your account, usually because an international information form arrived late, and the notice is the bill. The usual sources are a late Form 3520 for a foreign gift, inheritance, or trust (where the penalty runs up to 25% of a gift), a late Form 3520-A, a late Form 5471 for a foreign company ($10,000 per form per year, before continuation penalties), or a missed Form 8938. A business entity gets the twin notice, CP215.
Here is the part that makes these notices both outrageous and fightable. These are called assessable penalties, meaning the IRS can charge them directly, with no audit and no advance review of your side. No human weighed whether you had a good reason before the number landed. That is why a person who innocently reported a foreign inheritance a few months late can open an envelope demanding six figures. It is also why the defenses work as often as they do: the first genuine review of your facts happens after the notice, in the process you start. So treat the CP15 as the beginning of the case, not the end of it.
The 30-Day Window and What It Buys
Look at the face of your notice: it states a deadline, typically 30 days from the notice date, to respond with a written protest. That window is the single most valuable thing on the page. A timely protest routes your case to the IRS Independent Office of Appeals, a separate office whose job is settling disputes, and it does so before you have paid anything. A prepayment hearing in front of someone with authority to erase the penalty is the cheapest, cleanest forum this dispute will ever see.
Two practical warnings. First, the clock runs from the notice date, not the day it reached you, and these notices routinely arrive with a chunk of the window already gone, especially at foreign addresses. Second, interest starts running from the notice date unless the penalty is paid within the period the notice states, and on a Form 5471 penalty the separate continuation clock (an extra $10,000 per 30 days if the form still is not filed after IRS demand) can keep building while you deliberate. Missing the 30 days does not end your rights, since the penalty was assessed either way; you can still request abatement, appeal a denial within 30 days of the denial letter, and use the collection protections below. But everything after the window is slower and harder. The response should start the day the envelope is opened.
Reasonable Cause: The Lever That Actually Works
Nearly every one of these fights is won or lost on reasonable cause: showing you exercised ordinary care and prudence and still missed the filing. The classic winning story is the one we see most, and it is honest: a family received a foreign inheritance, nothing about the wire suggested a US form was due, no advisor flagged it, and the moment they learned, they acted. Ignorance alone is not automatically enough, which is why the difference between an erased penalty and an upheld one is documentation: who advised you and when, what you were told, what you did the day you learned, your compliance history, everything assembled into a coherent narrative rather than asserted.
The government's own record shows how well this lever works. According to the National Taxpayer Advocate, from 2018 to 2021 the IRS abated more than $179 million a year of the foreign-gift penalties it had charged automatically, roughly two thirds of them. That record is what pushed the IRS, in late 2024, to stop auto-assessing the foreign-gift penalty and to start reviewing reasonable cause before charging the foreign-trust ones, so fewer wrong notices go out now. But CP15s still issue, older ones still resurface, and the ones in the system still get fought the same way. Our Form 3520 penalty guide covers the underlying form; this page is about the fight after the notice.
CP15 in hand and the clock running?
A free 30-minute consult reads the notice, identifies the penalty and the deadline, and maps the response, protest, abatement, or both, before the window closes.
Book your free consultAppeals, and the Collection Due Process Backstop
The protest lands you in Appeals, where most of these cases actually resolve: a conference, usually by phone, where a settlement officer weighs the reasonable-cause package and the hazards of litigation. If Appeals rules against you, or if the case slips past the early stages entirely, the law builds in a second chance further down the road, and it is worth knowing about before you spend the first one.
When the IRS moves to collect, filing a lien notice or proposing a levy, you gain the right to a collection due process hearing. Under the IRS's own rules, a CP15 does not count as a "prior opportunity" to dispute the penalty, so at that hearing you can challenge the penalty itself, not just the collection mechanics. That is a genuine backstop for someone who missed the 30-day window entirely. One sequencing catch, and it changes strategy: if you already had a full Appeals conference on the penalty and lost, that earlier round generally uses up the chance, and the collection hearing will not re-decide liability. So which door you open first, and when, is a tactical decision, not a formality. If a dormant penalty resurfaces years later through an LT38 letter (the notice the IRS uses to restart paused collection), the same tools apply, with the same urgency.
The Court Route, and Its Expensive Catch
What about simply suing? For these penalties the courthouse door has an expensive catch: because they are assessed without the usual audit process, there is generally no way to get a judge to review them before paying. The refund route requires paying the penalty in full, then suing the government to get it back, a rule the National Taxpayer Advocate has criticized precisely because it puts review out of reach when the penalty is large. Whether a partial payment can ever open the door on these penalties is unsettled, so no plan should assume it.
There is also a live structural fight you may have read about: whether the IRS even has the power to assess some of these penalties by computer at all. Two federal appeals courts have said yes, the Tax Court has said no, and the appeals court covering Florida has not decided, so the question is genuinely open here. Our approach is consistent with what we tell clients on the underlying forms: we lead with reasonable cause, which works inside the IRS's own current procedure, and hold the assessment-authority and constitutional arguments in reserve for the cases that reach litigation. When a case does harden into a court fight, that is not the moment we hand it off; courtroom work on contested matters is what this firm does.
The Three Mistakes That Make a CP15 Worse
The same three missteps show up in file after file, and each has a better alternative.
Ignoring it. The penalty is already assessed, so silence is not neutral: interest accrues from the notice date, continuation penalties can grow, and the case slides toward liens and levies while the cleanest forum expires. Even a short extension request or a bare-bones timely protest beats silence.
Paying reflexively. Writing the check feels like closure, but it skips the two forums that cost nothing (the protest and the abatement request) and leaves full-payment-then-sue as the only road back. Weigh abatement first; pay early only when the penalty will clearly stick and stopping the interest is the goal.
Talking before thinking. A panicked call to the IRS, or a letter drafted the same night, can lock in damaging characterizations ("I knew about the form but…") that a reasonable-cause case then has to live with. The facts should be assembled once, carefully, with counsel, and told once. And one boundary worth restating from our offshore work: conversations with your accountant are not privileged; the legal strategy conversation belongs with a lawyer, who can then bring the accountant in under privilege where the facts allow. If the CP15 is only one symptom of a larger unreported-offshore picture, the response has to be coordinated with the bigger cleanup, which is mapped in our foreign account reporting guide and the streamlined procedures guide.
How We Work, and When We Co-Counsel
Penalty defense is response work, so we are built around the deadline. The notice review, the timely protest, the reasonable-cause package, the Appeals conference, and the collection-side filings are handled here, on a fee quoted once we see the notice and the facts. When a matter hardens into litigation, that is the courtroom work this firm does rather than refers away. The underlying computations for a complex foreign trust, a multi-entity structure, or a decades-long accumulation are co-counseled with an international tax advisor so the numbers behind the narrative hold up.
Most of this runs remotely, by phone and video, which matters here more than usual: CP15s chase foreign addresses, and many of our clients are Americans in Israel or elsewhere abroad whose window is already short when the envelope arrives. The first step is always the same and it is fast: read the notice, identify the penalty and the date, and calendar the deadline. Everything else is built from there.
Frequently Asked Questions
What Is IRS Notice CP15?
CP15 is the Notice of Penalty Charge. It means the IRS has already assessed a penalty against you, usually one of the automatic international ones: a late Form 3520 for a foreign gift or trust, a late Form 3520-A, a late Form 5471 for a foreign company, or a missed Form 8938. These penalties are assessed by computer, without any audit and without anyone reviewing your side first, which is why the notice seems to come out of nowhere. A business receives the twin notice, CP215. The dollar amount is often five or six figures, and it is far more fightable than it looks.
How Long Do I Have to Respond to a CP15?
The notice itself gives you a deadline, typically 30 days from its date, to file a written protest. Meeting that window is what routes your case to the IRS Independent Office of Appeals before you have paid anything, which is the cleanest and cheapest forum you will ever have for this penalty. The clock is short and the notice often arrives late, especially abroad, so the response has to start the day it is opened, not the week after.
What Happens If I Missed the 30 Days?
You still have real options, because the penalty was already assessed either way. You can request abatement for reasonable cause at any time, appeal a denial of that request within 30 days of the denial letter, raise the penalty at a collection due process hearing if the case reaches liens or levies, or pay in full and sue for a refund. What you lose by missing the window is the easy on-ramp, and meanwhile interest runs and collection moves forward. Late is worse than on time, but it is nowhere near hopeless.
Can These Penalties Really Be Removed?
Yes, and the government's own numbers say so. For the foreign-gift penalty alone, the IRS abated more than $179 million a year from 2018 to 2021, about two thirds of the penalties it charged, according to the National Taxpayer Advocate. The lever is reasonable cause: showing you acted with ordinary care and still missed the form, usually because nothing about a foreign gift or inheritance signals that a US form is due. Since late 2024 the IRS reviews reasonable cause before assessing many of these, so fewer wrong notices go out, but the ones that do still get fought the same way. Results always depend on your facts.
Does First-Time Abatement Apply to a CP15 Penalty?
Usually not, and this surprises people with clean compliance histories. First-time abatement, the automatic forgiveness for a first slip, applies to late-filing and late-payment penalties on regular returns. It does not apply to the event-based international forms, and the IRS rules exclude Forms 3520 and 3520-A from it by name. There is one narrow ride-along: a Form 5471 penalty charged only because the company return it was attached to was late can sometimes be abated along with the return penalty. For everything else, the path is reasonable cause, not first-time abatement.
Should I Just Pay the CP15 and Move On?
Not before the abatement path has been weighed. Paying does not end the analysis, and refusing to pay does not stop the fight either. The practical sequence matters: the prepayment Appeals route and reasonable-cause abatement cost you nothing up front, while the court route generally requires paying the entire penalty first and then suing for it back. Paying reflexively skips the free forums and jumps straight to the expensive one. The exception is interest management: if the penalty will clearly stick, paying sooner stops the interest.
What Is an LT38 Notice?
LT38 is the letter the IRS uses to restart collection on balances that sat dormant, including during the pandemic pause. A penalty assessed years ago on a CP15 you may barely remember can resurface through an LT38 demanding the balance. The reappearance does not make the penalty more valid, and the same reasonable-cause and appeal tools apply. It does mean the collection clock is running again, so the response urgency is real.
Do You Handle This In-House or Refer It Out?
The protest, the reasonable-cause package, the Appeals conference, and the collection-side response are handled here, and if the dispute hardens into litigation, courtroom work is what this firm does. The underlying computations for complex foreign trusts or multi-entity structures are co-counseled with an international tax advisor so the numbers hold up. We tell you up front which pieces your matter needs, before you commit to anything.
Common Situations
The inheritance penalty. A Florida woman reported a $600,000 inheritance from her mother in Israel on a Form 3520 filed eight months late, once an accountant finally flagged it. A CP15 arrived charging 25%, $150,000. Her facts were the classic innocent story: no advisor ever mentioned the form, and she filed promptly once told. A timely protest with a documented reasonable-cause package put those facts in front of a human being for the first time, which is precisely the review the computer never gave her.
The missed window. A client abroad received a CP15 for late Form 5471s, but the notice chased an old address and the 30 days were gone before he read it. Not the end: an abatement request went in with the reasonable-cause story, the denial was appealed within its own 30-day window, and the collection due process hearing remained in reserve as the backstop, since his CP15 had never given him a real prior hearing on the penalty.
The LT38 surprise. A retiree received an LT38 demanding a balance from a penalty assessed years earlier, from a CP15 she barely remembered, on a balance that had sat dormant since the pandemic pause. The revival letter restarted collection, not the merits: the penalty was as challengeable as it had always been, and the response paired a reasonable-cause abatement request with the collection-side protections while the balance was frozen in dispute.
Sources of Law
- The penalties CP15 typically assesses: 26 U.S.C. §6039F (late foreign-gift reporting, 5% per month to 25%); §6677 (foreign-trust reporting, greater of $10,000 or 35%, or 5% for Form 3520-A); §6038 (Form 5471, $10,000 per form plus continuation penalties); §6038D (Form 8938). CP15/CP215 mechanics and appeal rights: IRM 4.19.25; interest from the notice date, id.
- Prepayment, post-assessment Appeals review for international penalties: IRM 20.1.9; appeal of an abatement denial within 30 days of the denial letter: irs.gov/appeals/penalty-appeal.
- Collection due process: 26 U.S.C. §6330(c)(2)(B); IRM 8.22.8 (a CP15 or CP215 is not a "prior opportunity," so the underlying liability may be raised in CDP; a concluded prior Appeals conference is a prior opportunity).
- First-time abatement excluded for event-based international information returns, including Forms 3520 and 3520-A: IRM 20.1.1.3.3.2.1; the narrow Form 5471 ride-along where the penalty was systemically assessed with a late-filed company return: IRM 20.1.9.
- Full payment before refund litigation (Flora) and its burden on taxpayers: National Taxpayer Advocate blog (May 2024); the October 24, 2024 change ending automatic Form 3520 Part IV assessment and adding pre-assessment reasonable-cause review, with the abatement data (more than $179 million per year, 2018 to 2021): National Taxpayer Advocate blog (Oct. 2024). taxpayeradvocate.irs.gov
- Assessment-authority litigation: Farhy v. Commissioner (D.C. Cir. 2024) and Safdieh v. Commissioner (2d Cir. 2026) (assessable); Mukhi v. Commissioner, 163 T.C. No. 8 (2024) (contrary); the Eleventh Circuit has not decided. LT38 collection-restart notice: irs.gov. (retrieved 2026-07-24)
Updated on July 24, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate planning and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. This article is general information about US law, not legal or tax advice, and does not create an attorney-client relationship. Penalty abatement, Appeals, and collection outcomes turn on your specific facts and on IRS procedures that change; complex computations are co-counseled with an international tax advisor. Past results do not guarantee a similar outcome.