A CP523 notice means that the IRS intends to terminate your installment agreement and levy your assets. You may have missed payments or failed to comply with other terms of the agreement.
You can view an example of this notice on the IRS website.
Why does the IRS send a CP523 Notice?
You may have failed to make timely payments as required by your installment agreements. Or, you may have failed to file other tax returns or pay other taxes on time. Any one of these actions is a default on your installment agreement.
How should you respond to a CP523 Notice?
You have three options to respond to a CP523 notice to prevent the IRS from levying your assets:
- Pay the full balance by the deadline.
- Call the IRS and request that they leave you in an installment agreement.
- If your financial situation has gotten worse, explore your eligibility for an offer in compromise or currently not collectible status.
What are the chances of staying in an installment agreement?
The IRS is very skeptical of allowing you to remain in an installment agreement after a default. This is especially true if you’ve continued to be late on payments for tax years after your installment agreement.
Your chances are greatest if this is your first default and go down if you have multiple defaults. This is largely a judgment call by the IRS, so be prepared to explain why you will be able to make payments and avoid a default on your new installment agreement when you weren’t able to do so in the past.
What happens if I ignore a notice of intent to terminate installment agreement?
The IRS will terminate your installment agreement. You will still owe any remaining amount, and interest and penalties will continue to accrue. If you were using automatic payments, you will lose the penalty reduction for doing so. The IRS may garnish your wages, take money out of your bank account, or seize other assets to cover the amount that you owe.