If you received a CP523, it means the IRS is informing you of their intent to terminate your installment agreement and seize (levy) your assets because you have defaulted on your agreement. So what action should you take?
Receiving a CP523 means that you currently have an installment agreement with the IRS and — for whatever reason — you have defaulted on your payments. Reasons why the IRS would terminate an installment agreement are:
- Failure to pay the monthly amount due (the most common reason);
- Failure to meet the required estimated tax payments or deposits;
- Not fully paying the amount due on the return most recently filed;
- Not providing the IRS with updated information when they ask for it; and
- Not filing a tax return or adding a new balance to the IRS.
Steps to take
When you receive a Notice CP523 it means that your installment agreement has been placed into “default status,” but is not yet terminated. When the installment agreement is in default status, you have the right to request an appeal (a CAP appeal). This appeal gives you the right to review the reason for terminating your installment agreement and ask for reinstatement. You have the right to request this CAP appeal for up to 30 days after the agreement is terminated. Taking advantage of a CAP appeal can be a fantastic solution to your installment agreement problem, but only if you file it on time.
In addition to this CAP appeal process, you also have 30 days from the date on the notice to resolve the reason for the default. You can pay the rest of the amount due while in default status before your installment agreement is terminated. Just make sure you are referencing the date printed on the Notice CP523, and not the date you actually received the notice.
To clarify: the CAP appeal lets you ask for reinstatement up to 30 days after the agreement is terminated. Meanwhile, you have 30 days after the date printed on the Notice CP523 to resolve the reason for the default.
…and then follow up
Don’t count on the IRS to automatically reinstate your installment agreement even after you make a payment you believe should cure the default. Take positive action and contact the IRS to ensure that they have cured the default and the installment agreement has been reinstated. It may take a little time and effort to contact the IRS and verify, but in the long run it’s well worth the invested energy. It’s easier to make a phone call now than to find out they made an error in the future. At that point, your only hope is to try to prove that you’re up-to-date on your payments.
If you can’t pay, there are options
If you ignore the Notice CP523 and your installment agreement is terminated, it means that the IRS will now use all means available to settle the debt including levy or wage garnishment. To avoid this kind of unpleasantness, review some of your other options, such as:
While negotiating with the IRS seems overwhelming, it’s definitely doable. If you need assistance, contact us. Showing the IRS that you mean business by hiring professional representation sets you up as someone who won't be pushed around. A Notice CP523 is not the end of the world, and certainly has plenty of options for a quick resolution. If you're feeling overwhelmed and uncertain of how to proceed, take a deep breath. We can help.
If you're feeling overwhelmed by your tax issue, contact us. We can help. Call us at 888-727-8796 or email firstname.lastname@example.org.