The IRS offers payment plans for taxpayers who owe the IRS and need to pay off tax debts. IRS installment agreements are one of the most popular IRS payment plans as the IRS considers your current financial situation when calculating your monthly payment amount to make sure it is manageable based on your income and expenses.
Why Did I Receive a CP523 Notice From the IRS?
Missing an IRS installment agreement payment, not responding to requests by the IRS for financial information, or not filing your federal tax return on time will result in the IRS sending you a CP523 notice. This common IRS notice advises you of the IRS’ intent to cancel your installment agreement and seize your assets.
If you do not contact the IRS within 30 days or make your IRS installment agreement payment before the termination date, your IRS installment agreement will default, and the IRS will start the collections process to levy your assets. Additionally, you will still be responsible for your full tax liability plus interest and penalties if your IRS installment agreement defaults.
What Should I Do When I Receive a CP523 Notice?
Contact the IRS as soon as you receive the CP523 notice. Remember, you have at most 30 days to respond or make your missed IRS installment agreement payment. Keep in mind that you will receive a CP523 notice from the IRS via postal mail only.
If you get an email claiming to be from the IRS about a CP523 notice, do not respond to the email. It is probably a scam, like phishing, to get your personal and bank information for identity theft purposes.
How Do I Contact the IRS About a CP523 Notice?
The IRS instructs people who get a CP523 notice to find the toll-free number in the upper right corner of your CP523. Call that number immediately to speak to an IRS customer service representative. You only have 30 days to resolve your CP523 related issue and prevent the IRS from starting legal actions against you.
What Can I Do If I Disagree with My CP523 Notice?
You have the right to appeal your CP523 notice. If you want to appeal, ask the IRS for a Collection Appeals Program (CAP) appeal. You will need to describe in detail why you do not think you should have received a CP523 notice. CAP appeals can also be used to appeal modifications or rejections of IRS installment agreements.
While the IRS does not reject many installment agreements, they may propose a different agreement if they think the taxpayer can make higher monthly payments due to the amount of their income and liquid assets.
If My IRS Installment Agreement Defaults, Will the IRS Levy to Collect My Full Tax Debt?
Unless you contact the IRS within 30 days of receiving your CP523 notice or make your IRS installment agreement payment, they will begin proceedings to levy your liquid assets. Examples of liquid assets that the IRS can seize when a taxpayer defaults on an installment agreement include:
- Checking accounts
- Money market accounts
- Savings accounts
- Safe deposit boxes holding cash
- U.S. Treasury bills
Real estate property is not considered a liquid asset in many of these cases, because it cannot easily and quickly be converted into money to pay off tax debts.
Can I Get My IRS Installment Agreement Reinstated After It Defaults?
One way to get your IRS installment agreement reinstated after it defaults is by showing the IRS you can no longer make payments due to loss of employment, unexpected medical bills, or other financial instability.
If your financial condition has not changed since you made your last installment agreement payment, however, and you do not contact the IRS within 30 days, the IRS will levy your assets.
Proving you cannot afford to make payments on an IRS installment agreement due to financial hardship may give you temporary relief. The IRS groups taxpayers who have little income and no liquid assets as “Currently Not Collectible.” CNC status may be used as a temporary solution to prevent an IRS levy. Once your financial situation improves, you can see if you qualify for the Fresh Start Program to establish another IRS installment agreement to repay your remaining tax debt.