CP523I Notice: Installment Agreement Default – Intent to Terminate and Levy Income

The CP523I Notice is issued by the IRS to inform taxpayers that their installment agreement has defaulted due to missed payments or non-compliance. This notice is a warning that if the taxpayer does not bring the account current, the IRS may terminate the agreement and pursue income levies as a collection method. The CP523I serves as both a notice of default and a last chance for the taxpayer to prevent more severe enforcement actions.

Key components of the CP523I Notice include:

1. Explanation of Installment Agreement Default
   The notice outlines why the installment agreement is in default. Common reasons include missed or late payments, failure to remain current on new tax obligations, or changes in the taxpayer’s financial situation that were not reported to the IRS. The IRS requires consistent payments on installment agreements, and non-compliance may lead to termination of the agreement.
2. Intent to Terminate the Agreement and Levy Income
   If the taxpayer does not resolve the default, the IRS will terminate the installment agreement. Upon termination, the IRS may begin income levies, directly garnishing wages or other income sources until the debt is fully recovered.
3. Options for Reinstatement or Modification
   Taxpayers can take action to reinstate or modify the agreement. Options include:
   • Making up missed payments: Paying the outstanding amount owed to bring the account current.
   • Requesting a payment modification: If financial circumstances have changed, taxpayers can contact the IRS to request a lower monthly payment.
   • Financial documentation: Providing documentation that demonstrates financial hardship, which may qualify the taxpayer for adjusted terms.
4. Consequences of Ignoring the Notice
   If the taxpayer does not respond, the IRS will initiate levy actions. This could involve wage garnishments, bank account levies, or other enforced collections, impacting the taxpayer’s income and financial stability.
5. Importance to Tax Debt Resolution
   The CP523I Notice is a critical reminder of the importance of maintaining an installment agreement. By responding promptly, taxpayers can negotiate new terms, prevent the levy, and avoid additional penalties, supporting their tax debt resolution journey.

The CP523I Notice serves as both a warning and an opportunity for taxpayers to address installment agreement defaults before facing income levies and other enforcement measures.