Getting a letter from the IRS is enough to make anyone uneasy, but receiving a CP523 can be particularly stressful. This notice means the IRS is warning you about a significant issue with your tax payment plan. Understanding what the CP523 is and how to respond can help you avoid more serious consequences, like losing assets or wages.
Why Did You Get a CP523 Letter?
A CP523 letter is sent when you’ve defaulted on your Installment Agreement with the IRS. An Installment Agreement is a payment plan that allows you to pay off your tax debt over time. While it’s a helpful solution for many taxpayers, failing to meet its terms can trigger serious action.
Here are some common reasons the IRS might send a CP523:
- Missed Payments: If you miss even one scheduled payment, the IRS may consider your agreement in default.
- Failure to File or Pay Other Taxes: Your Installment Agreement requires you to stay current on all future tax obligations. Missing a filing deadline or owing additional taxes can jeopardize the agreement.
- Insufficient Funds: If you’re using direct debit and a payment bounces, the IRS may count that as a missed payment.
The CP523 letter is the IRS’s way of notifying you that your agreement is about to be terminated. Once terminated, the IRS can move forward with aggressive collection actions, including levies on your bank accounts, wages, or other assets.
What Should You Do If You Get a CP523?
Receiving this letter is serious, but it’s not too late to take action. Here’s what you should do:
- Review the Letter
The CP523 will include details about your Installment Agreement, how much you owe, and the deadline for taking action—usually 30 days from the date on the letter. - Make the Missed Payment
If you missed a payment, making it as soon as possible may help you reinstate your agreement. Contact the IRS to confirm that catching up on payments will resolve the issue. - Call the IRS Immediately
Don’t wait for the deadline to pass. Contact the IRS to discuss your options. Depending on your circumstances, you may be able to:- Reinstate your Installment Agreement by addressing the default.
- Negotiate a new payment plan if your financial situation has changed.
- Request a Collection Due Process (CDP) Hearing
If you disagree with the CP523 notice or need more time to address the default, you can request a CDP hearing. This must be done within 30 days of receiving the letter. A CDP hearing gives you an opportunity to explain your situation and work out an alternative resolution. - Seek Professional Assistance
Navigating the IRS’s processes can be confusing and time-sensitive. A tax resolution professional can help you evaluate your options, communicate with the IRS on your behalf, and potentially prevent collection actions.
Don’t Ignore a CP523 Letter
Ignoring a CP523 letter will only make matters worse. Once your Installment Agreement is terminated, the IRS can resume collection efforts, including placing levies on your wages or accounts. Acting quickly is essential to protecting your financial stability.
Resolve IRS Issues with Confidence
When you have an IRS problem, you have a legal problem. And if you’ve received a CP523 letter, you shouldn’t navigate it alone.
At McCauley Law Offices, we specialize in helping taxpayers resolve issues with the IRS, including reinstating payment plans and stopping collections.
Call us for a free consultation, and let us help you take control of your tax situation today.
