CP523B Notice: How to Keep Your IRS Payment Plan Active
Summary:
The CP523B IRS Notice is issued when a taxpayer has defaulted on an installment agreement. This notice warns that the IRS intends to terminate the agreement and may proceed with enforced collection actions, such as levying assets or garnishing wages. The notice advises taxpayers to take immediate action to prevent termination by making payments or contacting the IRS to reinstate the agreement. This article explains what the CP523B Notice entails, the steps you should take, potential consequences of inaction, and available options for resolving the situation.
Receiving a CP523B Notice from the IRS can be alarming, as it indicates that your installment agreement is at risk of termination. When you’ve fallen behind on your tax payment plan, the IRS sends this notice to inform you of the intent to cancel the agreement and potentially seize assets or garnish wages. Understanding your options and taking prompt action is crucial to avoid severe consequences. This article will guide you through the process of responding to the CP523B Notice, help you explore potential solutions, and explain what happens if you don’t address the issue.
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What is the CP523B notice?
The CP523B Notice is a formal communication from the IRS indicating that your installment agreement for settling back taxes is in jeopardy. This notice is typically sent when a taxpayer has failed to make the agreed-upon payments or has incurred a new tax debt, causing the installment agreement to go into default.
The IRS issues a CP523B Notice to alert taxpayers of its intent to terminate the installment plan unless corrective actions are taken. This can include making the overdue payments or paying any new tax liabilities. If you do not resolve the default, the IRS may initiate enforced collection actions, such as levying bank accounts, garnishing wages, or filing federal tax liens. Additionally, the notice may indicate a potential denial or revocation of your passport under the FAST Act if the debt is considered seriously delinquent.
Pro Tip
Set up IRS account alerts online to get real-time notifications on any changes to your tax return or account. This helps you stay updated on adjustments and due dates.
Why did you receive a CP523B notice?
There are several reasons why the IRS may send a CP523B Notice:
- Missed payments: You did not make one or more payments as per the terms of your installment agreement.
- New tax debt: You have incurred a new tax debt that was not included in the original agreement.
- Bank returned payment: A payment made towards your agreement was returned due to insufficient funds or other reasons.
- Expired payment method: If you had an automatic payment agreement, the payment method may have expired, causing payment failures.
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How to respond to a CP523B notice
It’s essential to act promptly upon receiving a CP523B Notice to avoid having your installment agreement terminated. Here are the steps to take:
- Read the notice thoroughly: The notice contains important information, including why you are in default, the deadline for action, and how to contact the IRS.
- Make a payment: If you missed a payment, pay the overdue amount before the termination date to avoid defaulting on the agreement.
- Contact the IRS: Call the number listed on the notice to discuss your options. The IRS may allow you to reinstate the agreement after paying a reinstatement fee or paying off new tax debts.
- Submit Form 9465: If you need to renegotiate your installment agreement, consider submitting Form 9465, Installment Agreement Request, to the IRS.
Acting quickly increases your chances of maintaining your payment plan and avoiding collection actions.
Consequences of not responding to the CP523B notice
If you ignore the CP523B Notice, the IRS may take significant actions, including:
- Termination of the installment agreement: Your payment plan will be canceled, and you will lose the ability to make monthly payments to settle your tax debt.
- Levying assets: The IRS may seize money from your bank accounts, garnish wages, or levy other assets to satisfy the debt.
- Federal tax lien: A lien may be placed on your property, which can affect your credit score and make it difficult to sell or refinance assets.
- Passport denial or revocation: Under the FAST Act, the State Department can deny or revoke your passport if your tax debt is seriously delinquent.
Pro Tip
Consider setting up automatic payments for your installment agreement to avoid missed payments. This can reduce the risk of default and keep your agreement in good standing.
How to reinstate your installment agreement
Reinstating a terminated installment agreement is possible, but it requires prompt action. Here are the steps to reinstate your agreement:
1. Contact the IRS immediately
Call the number on your CP523B Notice to discuss your situation with a representative. Explain why you defaulted and inquire about options for reinstatement.
2. Pay the reinstatement fee
The IRS may charge a fee to reinstate your agreement. In some cases, you may also need to pay any outstanding tax liabilities.
3. Update your payment information
Ensure that your payment method is up-to-date to avoid future payment failures. If you were using an automatic payment method, confirm that the account information is correct.
4. Consider submitting new financial information
If you’re facing financial hardship, you might be able to renegotiate the terms of your installment agreement by providing updated financial documentation.
Pro Tip
If you’re facing financial hardship, contact a tax professional before responding to the notice. They can help you explore options like an Offer in Compromise or “Currently Not Collectible” status.
Alternative options if you can’t pay the reinstatement fee or balance
If reinstating the agreement is not possible due to financial constraints, you may have other options:
- Request a temporary delay of collection: If you’re unable to make payments due to financial hardship, you can request that the IRS temporarily delay collection actions. This status is known as “Currently Not Collectible” (CNC).
- Apply for an offer in compromise: The IRS may agree to settle your tax debt for less than you owe if you meet specific criteria. An offer in compromise can reduce the amount you need to pay to resolve your tax liability.
- Seek a partial payment installment agreement: If you cannot pay the full amount, a partial payment plan allows you to make smaller payments over time.
- Consult a tax professional: A tax professional can help you explore options and communicate with the IRS on your behalf.
Impact of the CP523B notice on your passport
The Fixing America’s Surface Transportation (FAST) Act allows the IRS to certify a taxpayer’s debt as seriously delinquent if it exceeds $59,000 (including penalties and interest). When a debt is certified, the State Department may deny passport applications or renewals, and in some cases, revoke an existing passport. The CP523B Notice may include language indicating that your tax debt could impact your passport status.
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Frequently asked questions
What should I do if I can’t pay the overdue amount before the termination date?
If you can’t pay the overdue amount by the termination date, you should still contact the IRS immediately. Explain your situation to an IRS representative and discuss alternative options, such as requesting a temporary delay in collection actions or applying for a different payment arrangement. It may also be worth considering an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed.
Can I set up a new installment agreement after my original one is terminated?
Yes, it is possible to set up a new installment agreement after your original one has been terminated. However, the IRS may require you to resolve any new tax liabilities or pay a reinstatement fee. Contact the IRS to discuss the possibility of entering into a new payment plan and what steps are necessary to reinstate or establish a new agreement.
Will interest and penalties continue to accrue if I default on my installment agreement?
Yes, even if you have an installment agreement in place, interest and penalties will continue to accrue on your outstanding tax debt. If you default on the agreement, these additional charges will continue to accumulate until the full balance is paid. Taking prompt action to reinstate the agreement or resolve the debt can help minimize the total amount you owe.
How do I avoid defaulting on a reinstated installment agreement?
To avoid defaulting on a reinstated installment agreement, ensure that you make all scheduled payments on time. Set up automatic payments if possible to prevent missed payments. Additionally, keep your contact information updated with the IRS, and notify them immediately if you face any financial difficulties that may affect your ability to make payments. Proactively addressing issues with the IRS can help prevent future defaults.
What happens if the IRS levies my assets after the agreement is terminated?
If the IRS levies your assets after your installment agreement is terminated, the agency may seize funds from your bank accounts, garnish your wages, or take other property to satisfy the tax debt. You can still attempt to resolve the issue by contacting the IRS, paying off the debt, or negotiating a payment plan. The sooner you act, the more likely you are to limit the impact of the levy and potentially recover some of the seized funds.
Need help understanding other IRS letters and notices? Visit our comprehensive guide to IRS Letters and Notices or search for the document you received in the table below.
| CP01 | The IRS verified your claim of identity theft and will monitor your account. |
| CP01H | The IRS received a tax return with a social security number that belongs to a dead person. |
| CP02H | Money is due on an amended return based on a grant received due to Hurricane Katrina, Rita, or Wilma. |
| CP03C | You received the First-Time Homebuyer Credit for a house you purchased. |
| CP04 | You may be eligible for tax deferment because either you or a spouse served in a combat zone, a qualified contingency operation, or a hazardous duty station during the tax year specified on your notice. |
| CP08 | You may be entitled to additional money due to the Additional Child Tax Credit. |
| CP10 | Your tax return changed due to a miscalculation, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP10A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP11 | You owe money because the IRS amended your return due to a miscalculation. |
| CP11A | Your tax return changed due to a miscalculation of the Earned Income Credit, and the refund you wanted to apply to an estimated tax payment also changed. |
| CP11M | Your tax return changed due to a miscalculation of the Making Work Pay and Government Retiree Credit, and the refund you wanted to apply to an estimated tax payment has changed. |
| CP12 | You are due a bigger refund because the IRS corrected one or more mistakes on your tax return. |
| CP12A | The IRS made changes to correct the Earned Income Credit (EIC) claimed on your tax return. |
| CP12E or CP12F | The IRS corrected a miscalculation on your return. |
| CP12M | The IRS made changes to the computation of the Making Work Pay and/or Government Retiree Credits on your return. |
| CP12R | The IRS made changes to the computation of the Rebate Recovery Credit on your return. |
| CP13 | The IRS made changes to your return due to a miscalculation. There is no refund or amount due. Your balance is zero. |
| CP13A | The IRS made changes to your return due to a miscalculation of the Earned Income Credit. There is no refund or amount due. Your balance is zero. |
| CP13M | The IRS made changes to your return due to a miscalculation of the Making Work Pay credit or the Government Retiree Credit. There is no refund or amount due. Your balance is zero. |
| CP13R | The IRS made changes to your return due to a miscalculation of the Recovery Rebate Credit. There is no refund or amount due. Your balance is zero. |
| CP14 | You owe money on unpaid taxes. |
| CP16 | The IRS made changes to your return due to a miscalculation. The refund you were due was applied to other tax debts. |
| CP21A | You owe money due to the changes you requested that the IRS make on your tax returns. |
| CP21B | You are due a refund due to the changes you requested that the IRS make on your tax returns. The money should arrive within 2 to 3 weeks. |
| CP21C | The IRS made the requested changes to your tax return. You will not receive a refund, and there is no tax due. Your balance is zero. |
| CP21E | As a result of your recent audit, the IRS made changes to your tax return, and you owe money as a result of those changes. |
| CP21I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP22A | The IRS made the changes you requested, and you owe money as a result. |
| CP22E | As a result of your recent audit, the IRS changed your tax return, and you now owe money. |
| CP22I | The IRS made changes to your tax return relating to the Individual Retirement Arrangement (IRA) taxes. You owe money due to the changes. |
| CP23 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You owe taxes due to these changes. |
| CP24 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP24E | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. This resulted in an overpayment of estimated taxes. |
| CP25 | The IRS changed your return because there was a difference between the amount of estimated tax payments listed on your tax return and the amount actually posted to your account. You are not due a refund, nor do you owe any money. Your balance is zero. |
| CP31 | You need to update your address because your refund check was returned to the IRS. |
| CP45 | The IRS was unable to apply your overpayment to your estimated tax as you requested. |
| CP49 | The IRS used all or part of your refund to pay a tax debt. |
| CP53 | Your refund check will be sent by mail because the IRS can’t provide your refund through direct deposit. |
| CP57 | The bank declined your payment, so the IRS was unable to draft funds from your bank account. |
| CP71 | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71A | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71C | A reminder of the amount you owe in tax, penalty, and interest. |
| CP71D | A reminder of the amount you owe in tax, penalty, and interest. |
| CP88 | The IRS is holding your refund because you haven't filed one or more tax returns, and it believes you will owe tax. |
| CP90 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy in a Collection Due Process hearing. |
| CP91 | The IRS will levy up to 15% of your social security benefits for unpaid taxes. |
| CP120 | The IRS needs documentation of your tax-exempt status. |
| CP120A | Your organization’s tax-exempt status has been revoked because it failed to file a Form 990 series return for three consecutive years. |
| CP130 | You may no longer need to pay the Alternative Minimum Tax (AMT) because your tax return filing requirements changed. |
| CP152 | The IRS received your return. |
| CP153 | The IRS will send your refund by mail because your direct deposit did not go through. |
| CP161 | You have an unpaid balance due to the IRS. |
| CP166 | Your monthly payment to the IRS did not go through due to insufficient funds in your bank account. |
| CP178 | You may no longer owe excise tax because your tax return filing requirements changed. |
| CP231 | You need to update your address because your refund was returned to the IRS. |
| CP259 | You did not file the business tax return identified in the notice. |
| CP259A | You should have filed these forms but did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax, or Form 990-N (e-Postcard). |
| CP259B | The IRS requires you to file these forms but did not – Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259C | The IRS believes that you are a private foundation, but did not file the required Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation. |
| CP259D | You must file this form, but you did not – Form 990-T, Exempt Organization Business Income Tax Return. |
| CP259E | You should have filed this form, but you did not – Form 990-N (e-Postcard) or Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP259F | The IRS requires you to file this form but did not – Form 5227, Split-Interest Trust Information Return. |
| CP259G | The IRS requires you to file this form, but you didn’t – Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations. |
| CP259H | As a tax-exempt political organization, you must file this form, but you did not – Form 990/990-EZ, Return of Organization Exempt From Income Tax. |
| CP276A | You submitted your tax liability schedule incorrectly. The IRS typically charges a Federal Tax Deposit (FTD) penalty for this but did not this time. |
| CP276B | The IRS did not receive the correct amount of tax deposits. It normally charges a Federal Tax Deposit (FTD) penalty but did not this time. |
| CP297 | The IRS is notifying you of its intent to levy certain assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP297A | The IRS has levied your assets for unpaid taxes. You have the right to dispute the levy at a Collection Due Process hearing. |
| CP298 | The IRS notifying you of its intent to levy up to 15% of your social security benefits for unpaid taxes. |
| CP501 | You have a balance due on one of your tax accounts. |
| CP503 | You have an unpaid balance on one of your accounts, and the IRS has not heard from you. |
| CP504 | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy your state income tax refund to apply it to the amount you owe. |
| CP504B | You have an unpaid amount due on your account. If you do not pay immediately, the IRS will levy certain property or rights to property to apply it to the amount you owe. |
| CP521 | A reminder that you have an installment agreement payment due. |
| CP523 | You have defaulted on your payment agreement. Therefore the IRS is terminating the agreement and will levy your assets. |
| CP601 | Usted tiene un saldo pendiente de pago (dinero que le debe al IRS) en una de sus cuentas contributivas. |
| CP603 | No hemos recibido respuesta de parte de usted y todavía tiene un saldo sin pagar en una de sus cuentas contributivas. |
| CP604 | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará cualquier reembolso de impuestos estatales al que tenga derecho y aplicarlo al pago de su deuda. |
| CP604B | Usted tiene un saldo sin pagar en su cuenta. De no pagar esta cantidad inmediatemente, el IRS embargará ciertas propiedades o derechos de propiedad y lo aplicará al pago de su deuda. |
| CP621 | Este aviso es para notificarle que usted tiene un plan de pagos a plazos vencido. Por favor, envíe el pago inmediatamente. |
| CP623 | Este aviso es para informarle nuestra intención de cancelar su plan de pagos a plazos y confiscar (embargar) sus bienes. Usted incumplió en su acuerdo. |
| CP711 | Nosotros realizamos cambios a su planilla debido a que entendemos que hubo un cálculo erróneo. Como resultado de estos cambios, usted adeuda dinero por sus contribuciones. |
| CP721 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP722 | Hicimos el(los) cambio(s) que usted solicitó a su declaración de impuestos para el año tributario que aparece en su aviso. Como resultado de éste(estos) cambio(s) usted debe dinero en sus impuestos. |
| CP771 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP772 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP773 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP774 | Usted recibió este aviso para recordarle sobre la cantidad que adeuda en contribuciones, multas e intereses. |
| CP959 | Usted no radicó su planilla de contribución de negocios identificada en este aviso. |
| CP2000 | The income or payment information on file doesn’t match your tax return. The discrepancy may result in an increase or decrease in your tax due. |
| CP3219A | The IRS has received information that is different from what you reported on your tax return. This may result in an increase or decrease in your tax. |
| CP3219N | The IRS didn’t receive your tax return, so it calculated your return based on the information received from employers, financial institutions, and others. If you want to challenge the proposed tax, you have 90 days from the date of this notice. If you are outside the country, you have 150 days. |
| Letter 0012C | The IRS needs additional information to process your tax return. |
| Letter 0484C | The IRS wants a completed |
| Letter 0525 | Updates you on proposed changes after an IRS examination. Any changes are explained and details the refund due or taxes owed. |
| Letter 531 | IRS Notice of Deficiency. The information the IRS received about you was different from what you reported on your return. |
| Letter 0668D(LP 68) | The IRS released their levy. |
| Letter 0549C | Your tax bill was paid. |
| Letter 0681C | The IRS accepted your payment proposal. However, this is not a formal Installment Agreement. |
| Letter 0757C | You did not adhere to the terms of your Installment Agreement. |
| Letter LT 11 | The IRS plans to seize your property or rights to property. |
| Letter 1058 | The IRS has not received your payment. It plans to seize your property or rights to property. |
| Letter 1615 (LT 18) | You must respond to the IRS within 10 days of this notice regarding past due tax returns. |
| Letter 1737 (LT 27) | Complete and sign Form 433F, Collection Information Statement. |
| Letter 1961C | Your application for a Direct Debit Installment Agreement was declined. It explains why and what you need to do to qualify. |
| Letter 1962C | Your application for a |
| Letter 2050 (LT 16) | The IRS is trying to collect unpaid taxes from you from returns that have been filed or from returns that have not been filed. |
| Letter 2257C | The IRS is providing the payoff amount that you requested. |
| Letter 226-J | An IRS letter to large employers notifying them that they may be liable for an Employer Shared Responsibility Payment (ESRP). |
| Letter 2271C | A request for an Installment Agreement has been approved. It explains the fees and how to qualify for a Low Income Fee Reduction. The letter may also request missing information. |
| Letter 2272C | An IRS letter explaining why your request to pay the balance due in installments was declined. |
| Letter 2273C | A confirmation letter of your request to pay the balance due in installments. It contained the amount to pay, fees charged, and where to send payment. Instructions on how to apply for the Low Income Fee Reduction included. |
| Letter 2318C | A response to a request to pay taxes due to payroll deductions. It also explains the fees that are charged. |
| Letter 2357C | The IRS is admitting that it did not send you the balance due notices that it should have. |
| Letter 2603C | The IRS accepted your installment agreement. The IRS will file a Notice of Federal Tax Lien on your personal property. |
| Letter 2604C | The IRS has accepted your request for installment payments. This IRS letter provides the monthly payment, the address where to send it, and the fees charged. The letter also provides instructions on how to apply for the Low Income Fee Reduction. |
| Letter 2761C | The IRS is requesting your combat zone service dates to ensure that it provides you with the special provisions and protection of the combat zone deferment. Copies of military orders or other documentation to support your time served may be requested. Civilians working in support of the Armed Forces may be required to provide a Letter of Authorization or a letter from their employer. |
| Letter 2789C | An annual reminder notice, as required by law, of the balance due to the IRS. It explains that penalties and interest continue to accrue until the balance is fully paid. |
| Letter 2840C | Confirms your Installment Agreement request and includes the payment amount and due date. This IRS letter explains the fees charged for paying monthly and explains how to apply for the Low Income Fee Reduction (if you qualify). |
| Letter 3030C | Provides an explanation of the tax, penalty, and interest still due on your account. |
| Letter 3127C | A confirmation of your request to make a change to your Installment Agreement. This IRS letter explains the fees for the change. Changes can be to the payment amount or due date, or it can include additional liabilities. |
| Letter 3174 | A reminder of taxes due after the IRS has sent a Notice of Intent to Levy. |
| Letter 3217C | The IRS has accepted your request to pay the balance in installments. This IRS letter provides your payment amount, the due date, and fees charged. The letter also provides instructions on applying for the Low Income Fee Reduction (if you qualify). |
| Letter 3228 (LT 39) | A request to pay the balance due within 10 days using the envelope provided. |
| Letter 3500 | The IRS has received your documents, and it needs additional time to review them. |
| Letter 3572 | Your Federal Income Tax Return has been selected for examination. The IRS auditor requests that you call to schedule an audit appointment. |
| Letter 4883C | The IRS received your federal income tax return but needs more information to verify your identity in order to process your tax return accurately. |
| Letter 4903 (LT 26) | You must file your tax returns immediately. The IRS has previously contacted you, but it did not receive a response. |
| Letter LP 47 | The IRS is trying to locate the person identified in the letter and is requesting that you provide their new address. |
| Letter LP 59 | The IRS has not received a response to the notice of levy it previously sent. |
| Audit Letter 2205 | The IRS manages audits either by mail or through an in-person interview to review your records. The interview may be at an IRS office (office audit) or the taxpayer’s home, place of business, or accountant’s office (field audit). |
| Letter 915 | You recently underwent an audit, and the IRS informs you that you now owe taxes. |
Key takeaways
- The CP523B Notice indicates that your IRS installment agreement is at risk of termination due to default.
- Prompt action is required to prevent the agreement’s termination and avoid enforced collection actions.
- Options for resolving the issue include making payments, reinstating the agreement, or seeking alternative arrangements such as an Offer in Compromise.
- Failure to address the notice can result in asset levies, wage garnishment, federal tax liens, and passport complications.
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