The CP523 Notice is sent by the IRS to notify taxpayers that their installment agreement has defaulted. This typically happens when the taxpayer misses a scheduled payment or fails to comply with other terms of the agreement, such as filing all required tax returns. The default means the IRS may begin collection actions, such as levying bank accounts or wages.
Key details of the CP523 Notice:
- Reason for Default: The notice will explain why the installment agreement was defaulted, such as missed payments, non-compliance with filing requirements, or the accrual of new tax liabilities.
- Consequences of Default: The IRS will indicate that, unless action is taken, they may begin collection activities. This could include garnishing wages, placing liens on property, or seizing assets to satisfy the unpaid tax debt.
- Options for Reinstatement: Taxpayers have the option to reinstate the installment agreement by making the missed payments or by contacting the IRS to negotiate new terms. The notice will provide instructions on how to request reinstatement.
- Appeal Rights: Taxpayers may have the right to appeal the default or request a Collection Due Process (CDP) hearing to contest the IRS’s decision. The notice will include information on how to file an appeal.
It’s important for taxpayers to act quickly upon receiving a CP523 Notice to prevent the IRS from initiating aggressive collection actions and to resolve their installment agreement status.