Learn About IRS Notice CP523: Why You Should Act Immediately

If you are currently participating in an IRS installment agreement and missed a few payments, chances are you will receive IRS notice CP523. If this already happened to you, it is a clear indication your account requires immediate action. But what is the IRS notice CP523 all about? In this article, you will learn about this form and the steps you should take after receiving one. Contact a tax accountant in Pembroke Pines to evaluate your tax situation and recommend the best course of action.  

What Is the IRS Notice CP523?

The goal of a CP523 notice is to notify the taxpayer that the IRS installment agreement is on default. IRS notice CP523 warns the taxpayer that the IRS is about to either seize assets or impose a tax lien on his or her property. Soon before the IRS seizes the taxpayer property or assets, they will notify the taxpayer of the entire amount due. You may also reinstate the IRS installment agreement after paying a fee. But not everyone will meet the requirements for this option.  

When Is IRS Notice CP523 Sent Out?

IRS CP523 is sent out to taxpayers defaulting on an IRS installment agreement. Most circumstances require the IRS to send out notice cp523 when a few payments have been missed and if the taxpayer hasn’t been able to contact the IRS and respond to prior letters such as the CP523.

When a taxpayer agrees to an installment and resolves a past due balance yet fails to file the tax return, this will also represent a default action that may result in receiving a CP523 notice.

The tone of the CP523 letter may be a bit intimidating. However, IRS notice CP523 simply means that the IRS has imposed a tax lien on your property. The good news is the taxpayer may be able to avoid this action by sending payment immediately.   

How to Respond to IRS Notice CP523?

You usually have up to 30 days to respond to CP523. That’s from the time the notice was sent out and before the IRS takes action through asset seizure. The best way to respond to the CP523 notice is by sending a payment by the due date as soon as possible. If the taxpayer has any questions or would like to inquire about any other options available, such as the reinstatement of the installment agreement, this can be done by calling the IRS with the number provided on the CP523 letter.

You Have Some Time to Act but Reinstate Soon

While you still got some time and options to reinstate, you should not delay the process. It’s difficult for some taxpayers to keep up with the IRS installment agreement perhaps due to their income being seasonal or fluctuating throughout the year. But you got options and need to find out which ones may work out in your specific situation. An experienced tax accountant in Pembroke Pines can help you figure out what to do.

IRS notice CP523 indicates that the IRS installment agreement was placed in default status, yet it has not been terminated as of the date listed on IRS notice CP523. Thus, the taxpayer has the right to request an appeal, usually known as a CAP appeal. This appeal can be requested for up to 30 days after the agreement has been terminated.

Besides the CAP appeals process, taxpayers can also resolve the cause for the default prior to the agreement being placed in a termination status.  Again, taxpayers have up to 30 days from the day of the letter to remedy the reason for IRS CP523. For instance, if you can’t pay in full the amount due at tax time, you have the option to pay the remaining balance at the same time you are in default status before your installment agreement is terminated.

However, you should not expect the IRS to automatically restore your installment agreement but should rather take the appropriate actions to contact the IRS. Make sure the default has been cured and your IRS installment agreement will start up again. Remember, your 30-day window is not a lot of time, so this must be done rather quickly.

What is a Good Solution?

If you default an IRS installment agreement, you probably have a good reason for doing so. Perhaps the amount is too much, and you can’t afford it. In most cases, there are other options to handle the IRS installment agreement and have it reinstated. Some strategies may work out for you, including setting up a lower monthly payment, hardship status, and an offer in compromise, or even Chapter 7 bankruptcy to terminate your tax obligations.

Contact My CPA, PA

In summary, if you received a CP523 notice, and missed a payment or a filing deadline, you will probably receive IRS notice CP523. If this happened to you, take some time to respond to this form in the most appropriate manner. Further penalties or interest can be avoided. If you want to discuss your options with a CPA in Miami, contact My CPA, PA.

Legal Disclaimer

Information Only / No Legal Advice Intended

This publication is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. Because each individual’s legal, tax, and financial situation is different, specific advice should be tailored to the particular circumstances. For this reason, you are advised to consult with your own attorney, CPA, and/or another advisor regarding your specific situation.

To ensure compliance with requirements imposed by the IRS, we inform you that any US federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and it cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Always seek advice based on your particular circumstances from an independent advisor. Any disclosure, copying, or distribution of this material, or the taking of any action based on it, is strictly prohibited.

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