San Mateo, CA: It was stressful but you were able to work out a payment plan (know as an installment agreement) with the IRS. Then comes an IRS Notice CP523--Intent to terminate your installment agreement along with a hefty bill. NOW WHAT DO YOU DO?
Understanding the IRS Notice: Intent to Terminate Installment Agreement
Understanding the CP523, being aware of its implications, and knowing the next steps can help mitigate potential issues.
An Intent to Terminate Installment Agreement notice is sent when the IRS believes you have defaulted on your installment agreement. This agreement, typically arranged to allow taxpayers to pay off their tax debt in monthly installments, is a binding contract between you and the IRS. There are some common reasons for receiving a CP523 notice include missing a payment, failing to file a required tax return on time, or filing a tax return with a balance due and unpaid.
The IRS will terminate MULTIPLE TAX YEARS within the installment agreement for a perceived "violation" of the terms. You literally will start from scratch if you are not careful.
When you receive this notice, it’s crucial to act promptly:
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Review the Notice : Carefully read the notice to understand the specific reason for the termination intent. These notices are historically "clear as mud" and it may be difficult to figure out what went wrong.
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Contact the IRS : If you believe the notice was sent in error or you have valid reasons for missing a payment, contact the IRS immediately. The contact information will be provided in the notice. Be prepared for a long wait on the phone---typically 1-3 hour hold time is not uncommon. You may have to call back on multiple days. That is simply the reality of telephoning the IRS nowadays.
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Be prepared to make a past due payment : If the plan is reinstated, the IRS may just "rollover" outstanding late payments into the new plan, but do not count on that. Wait until you know what is going on before making a payment. You can make a voluntary payment anytime--make sure it counts.
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Seek Professional Help : Consulting a tax attorney can provide guidance tailored to your situation. They can negotiate with the IRS on your behalf and help you understand your options. Half the battle is knowing what went wrong and how to fix it so the situation does not happen again. An experienced tax attorney will help.
Taking immediate action after receiving a CP523 notice is essential to avoid further penalties and more complications. Stay proactive, don't hide your head in the sand, and seek professional assistance to navigate this challenging situation effectively.
Law Office of Kevin Rego
650.933.5222
Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.
