Just received IRS letter about unpaid $695 health insurance penalty from 2017 - should I be worried?

The CP71H notice is the IRS following up on unpaid shared responsibility payments (the official name for the health insurance penalty under the Affordable Care Act). While many people did ignore these penalties, the IRS is still legally entitled to collect them for open tax years. The fact that you received full refunds for 2018 and 2019 doesn't necessarily mean the IRS forgave the penalty. The IRS systems that process refunds and those that track outstanding balances don't always communicate immediately, which explains why your refunds weren't offset. Regarding the three-year period you mentioned - the IRS generally has 10 years from the assessment date to collect taxes, not 3 years. The 3-year period typically refers to how long you have to claim a refund or the IRS has to audit your return. For collections, they have much longer. My suggestion would be to pay the penalty if you can afford it. The amount will continue to grow with interest and penalties, and the IRS has many collection tools at their disposal.

After battling with a similar situation (different year though), I discovered taxr.ai at https://taxr.ai and it really helped me decode what was actually happening with my tax notices. I had received multiple confusing IRS notices about health insurance penalties that I thought had been resolved. I uploaded the letters to taxr.ai and it explained exactly what the notice meant, what my options were, and what would likely happen if I ignored it. The system actually highlighted specific deadlines and consequences I had completely missed when reading the notice myself. They also told me exactly what documentation I needed to respond effectively. What I really liked was that it showed me similar situations from other people who'd faced the same issue and what happened in their cases - gave me a much clearer picture of my options.

Just wanted to update after trying taxr.ai that was mentioned earlier. I had a similar issue with an old health insurance penalty from 2016, and I was getting increasingly threatening letters. I was skeptical at first but uploaded my CP71H notice to the site, and wow - it immediately identified the exact issue and gave me a clear explanation of my options. The best part was it showed me a timeline of what the IRS would likely do next if I chose different paths (paying, installment plan, or ignoring it). I ended up calling the IRS with the specific information the site recommended I reference, and I was able to set up a payment plan with minimal hassle. They even showed me where on the notice to find my unique reference numbers which made the call go much smoother. Saved me hours of stress and confusion!

After dealing with a ton of "you need to pay this now" letters from the IRS about past penalties, I found that trying to call them directly was completely useless. I spent HOURS on hold only to get disconnected or transferred to someone who couldn't help. Then I discovered Claimyr at https://claimyr.com which basically holds your place in the IRS phone queue and calls you when an actual agent is ready to talk. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was able to finally speak with someone at the IRS about my health insurance penalty and get actual answers about my options. Got connected in about 45 minutes instead of spending my entire day on hold. The agent was able to explain exactly what would happen with my penalties and interest if I didn't pay by their deadline.

I need to eat my words about Claimyr being a scam. After my last attempt to call the IRS ended with a 2-hour hold and then a disconnection, I was desperate enough to try it. I used the service yesterday to call about my own penalty notice, and I'm still in shock at how well it worked. I entered my phone number, selected what I was calling about, and went about my day. About an hour later my phone rang, and I was instantly connected to an IRS representative - no hold time on my end at all. The agent was actually able to look up my account and explain that my health insurance penalty from 2017 was still collectible and would continue accruing interest. She helped me set up a payment plan that was much more manageable than paying the lump sum. Without this service I'd probably still be trying to get through to someone.

I'm dealing with the exact same issue! I also ignored the penalty back in 2017 (mine was $625 because I had insurance for one month). The CP71H notice just arrived last week. I called the IRS after I got the notice and was told that while they couldn't offset refunds for the health insurance penalty specifically, they can still collect the debt through other means. The agent said they recently started a new initiative to collect on these older penalties before they reach the collection statute expiration date. I ended up just paying mine online through the IRS Direct Pay system. The process was pretty simple and I got a confirmation right away. Figured it was better to just be done with it rather than risk additional interest or further collection actions.

Has anyone tried calling the Taxpayer Advocate Service about these old health insurance penalties? I've heard they sometimes help with IRS issues when you're facing hardship or can't get resolution through normal channels.