IRS Notice CP523: What It Means and What to Do

Why did I get a CP523?

Common reasons include:

• A missed or late installment agreement payment
• A new tax balance owed that was not paid in full
• A tax return that was not filed on time while on the agreement
• A returned or dishonored payment

What should I do?

1. Read the notice to find the reason for the default and the termination date.
2. Make the missed payment before the termination date shown, using IRS payment options.
3. Call the number at the top of the notice right away to ask about reinstating your agreement; you may need to pay a reinstatement fee or pay any new balance in full.
4. File any missing tax returns if the default is related to filing.
5. If you disagree with the termination, ask to appeal before the deadline.
6. Keep proof of all payments and of your contact with the IRS.

What documents do I need?

• The CP523 notice
• Your installment agreement terms
• Proof of payments made (bank statements, canceled checks, confirmations)
• Copies of any recently filed returns or notices about new balances
• Current income and expense information in case the agreement needs to be revised

What should I avoid?

• Don't wait past the termination date or the 30-day contact window.
• Don't assume the agreement is safe because you paid late; call to confirm it is reinstated.
• Don't ignore a new tax balance, since it can cause another default.

What if I disagree with a CP523?

Call the number at the top of the notice and explain why you disagree. You have the right to appeal the proposed termination to the IRS Independent Office of Appeals under the Collection Appeals Program. Per Publication 1660, you generally have 30 days from the date of the notice of intent to terminate to request an appeal. The appeal can be made by phone unless a Revenue Officer sent the notice, in which case it must be in writing, preferably on Form 9423. If the agreement is terminated, your right to appeal continues for an additional 30 days.

What happens if I ignore a CP523?

If you don't respond, the IRS says it will terminate your installment agreement and begin collection action, which can include filing a federal tax lien or levying wages and bank accounts. A seriously delinquent tax debt may also affect your passport.

What else should I know about CP523?

The CP523 is often recoverable. The IRS's own guidance focuses on curing the default before the termination date and reinstating the agreement, not on starting over. Publication 1660 also gives a specific appeal path for installment agreement terminations under the Collection Appeals Program. You generally have 30 days from the notice to appeal, the right continues for 30 days after termination, and levy is generally barred while a timely appeal is pending. A common trigger that people miss is a new balance from a later year. Staying on an agreement generally requires paying new tax on time, so an unpaid current-year balance can cause a default even when every monthly payment was made.