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IRS Notice CP523: What It Means and What to Do
Updated: 11 hours ago
Short answer: A CP523 tells you that you have defaulted on your IRS installment agreement and that the IRS intends to terminate it and seize assets if you do nothing. The IRS says to contact it as soon as possible and no later than 30 days from the date of the notice. All State Tax Resolution, led by Sabih Shafi, an Enrolled Agent, helps clients cure a default, reinstate a plan, or appeal a termination.
Key takeaways
A CP523 (or CP523 SP or CP623) says the IRS intends to terminate your installment agreement and levy your assets because you defaulted.
Contact the IRS right away, and no later than 30 days from the date of the notice.
Making your payment before the termination date can keep the agreement from being terminated.
You may have to pay a fee to reinstate, or pay any new tax liability in full.
If you disagree, you have the right to appeal. You can use the Collection Appeals Program.
What a CP523 is
The IRS says that if you received a CP523, CP523 (SP) or CP623 notice, it is informing you of its intent to terminate your installment agreement and seize (levy) your assets. The notice also says you have defaulted on the agreement and explains why the IRS is taking this action.
An installment agreement is an agreement to pay on a schedule. The IRS says it generally does not take enforced collection action while a plan is in effect. A CP523 means the IRS says you defaulted. Read the reason it gives. It decides what you need to fix.
The 30-day window
The IRS gives you two instructions:
Contact it as soon as possible, but no later than 30 days from the date of the notice.
Make your payment before your termination date to prevent the agreement from ending.
IRS Publication 1660 adds detail on appeals. You have 30 days from the date of the notice of intent to terminate to request an appeal. Unless you appeal within those 30 days, or cure the default, the installment agreement will terminate. After it terminates, your right to appeal continues for another 30 days.
What can cause a default
Your notice names the reason. The IRS also publishes a short list of what you must do to keep a plan from going into default:
Pay at least your minimum monthly payment when it is due.
File all required tax returns on time, and pay all taxes in full and on time.
Keep making your scheduled payments, even if the IRS applies a refund to your balance.
Tell the IRS if you move, using Form 8822, Change of Address.
The IRS says future refunds are applied to your tax debt until it is paid in full. Each item on that list is a way a plan can break. A notice sent to an old address can also cause you to miss the warning altogether.
How to reinstate your agreement
Start with the phone number on the notice. The IRS says to contact it right away to see if you can reinstate. It also says you may have to pay a fee to reinstate the agreement, or pay any new tax liability in full.
You can also use your IRS Online Account. The IRS lists reinstating after default among the changes you can make online. It also lets you change your monthly payment amount or due date, or convert to a direct debit agreement. If your new payment does not meet the requirements, the IRS prompts you to revise it. If you cannot make the minimum payment, you get directions for submitting a financial statement.
If you have already taken corrective action, the IRS still wants you to call, so it has a record and can reinstate the agreement.
If you cannot keep the old payment
If your budget has changed, ask the IRS to revise the payment. Other options exist if the plan no longer fits:
Currently not collectible: if you cannot pay because of financial hardship, the IRS may temporarily delay collection. The debt is not forgiven, and penalties and interest keep accruing.
Offer in Compromise: it settles a debt for less than the full amount. You must have filed all required returns and made required estimated payments. The IRS says you do not have to make payments on an existing installment agreement while it considers your offer.
Your appeal rights
If you do not agree with the reason the IRS gave for terminating your agreement, contact the IRS at the number on the notice. If you still disagree after talking, the CP523 says you have the right to file an appeal and can request a hearing with the IRS Independent Office of Appeals.
Publication 1660 says this appeal falls under the Collection Appeals Program, or CAP. Some details:
Termination, or proposed termination, of an installment agreement is one of the actions CAP covers.
Your appeal does not have to be in writing, unless the notice came from a Revenue Officer. Then it must be in writing, preferably on Form 9423, Collection Appeal Request.
The IRS cannot levy until 30 days after the termination. If you appeal within that 30-day period, it is prohibited from levying until your appeal is completed, unless it believes collection is in jeopardy.
If you appeal before the termination takes effect, you may not appeal the decision again once termination takes effect.
You cannot go to court if you disagree with the CAP decision.
Why a default can reach beyond your payments
If you do not respond, the CP523 says the IRS will terminate the agreement and begin collection action. That can include filing a federal tax lien or levying your wages or bank accounts. To see the wider chain of notices and collection steps, read how ignoring the IRS plays out.
The notice also explains the passport rules. The IRS says debts being timely paid under an approved installment agreement are not certified to the State Department as seriously delinquent. Staying in the agreement matters for that reason too.
How we help
I am Sabih Shafi, an IRS Enrolled Agent. We work with clients nationwide and abroad, by phone and video, in English or Spanish.
Cause of default: we read your notice and your IRS account to see what triggered it.
Reinstatement: we contact the IRS, ask for reinstatement, and revise the payment if needed.
Appeal: we request a CAP appeal inside the window when the termination looks wrong.
Alternatives: if the plan no longer fits, we look at hardship status or an Offer in Compromise.
A flat fee quoted in writing before work starts.
Frequently Asked Questions
What does it mean when the IRS sends a CP523?
It means the IRS says you defaulted on your installment agreement. It intends to terminate the agreement and seize assets unless you act. The notice explains the reason.
How long do I have to respond to a CP523?
The IRS says to contact it as soon as possible, but no later than 30 days from the date of the notice. Make your payment before the termination date if the default is a missed payment.
Can I get my installment agreement back after a default?
Often you can ask. The IRS says to contact it right away to see if you can reinstate. You may have to pay a fee or pay any new tax liability in full. You can also reinstate through your IRS Online Account.
Will the IRS levy my wages right after a CP523?
The IRS says that if you do not respond, it will terminate the agreement and begin collection, which can include a lien or a levy. Publication 1660 says the IRS cannot levy until 30 days after the termination, and a timely appeal extends that protection.
Can I appeal a CP523?
Yes. If you disagree with the reason, you have the right to appeal and request a hearing with the IRS Independent Office of Appeals. Publication 1660 gives 30 days from the date of the notice to request the appeal.
What if I cannot afford the payments any more?
Tell the IRS. Ask to revise the payment, or ask about delaying collection if you are in hardship. Do not just stop paying and hope the IRS does not notice.
General information, not tax advice for your situation.
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This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 20-minute review or call or text us directly.
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