CP523: respond to a threatened payment-plan termination
CP523 tells you that the IRS intends to terminate an existing installment agreement and take collection action. Your agreement is in default, but the notice is not, by itself, confirmation that termination has already occurred. Read the reason, notice date, termination information and response instructions promptly.
The immediate task is to establish what went wrong and what would correct it. A missed bank debit, payment credited to a different period, new unpaid tax and a request for financial information need different evidence. Making another payment does not necessarily resolve every reason for default.
Identify the agreement stage
Keep the agreement, all pages of CP523, recent payment records and later IRS correspondence together. Establish which situation applies:
- A payment appears missing, but no termination notice has arrived. Check the scheduled amount and date, payment method, bank result and IRS account posting. Contact the IRS about the discrepancy rather than assuming the agreement remains unaffected.
- CP523 proposes termination. Identify the reason for default and the action requested before the termination date. The current IRS CP523 instructions explain prompt contact and possible reinstatement.
- The agreement has actually terminated. Establish that status and date through the IRS record or subsequent communication. A discussion about changing payments is not confirmation that the old agreement was restored.
- The IRS says the agreement is reinstated or revised. Retain confirmation of the payment amount, due date, method and any remaining requirements. Check the next payment against those terms.
A first application that was never approved is a different problem. Use the rejected payment-plan guide for online ineligibility, pending requests and formal rejection. The payment-plan guide explains establishing and maintaining an arrangement.
Match the reason to the evidence and correction
Use a private working record to connect the stated default reason with the evidence, action and later confirmation. Do not send account credentials or sensitive documents to a general website questionnaire.
If the table is clipped, scroll sideways. Use arrow keys when focused.
| Reason to check | Evidence, correction and confirmation |
|---|---|
| A scheduled payment was not received | Compare the agreement’s amount, due date and method with the bank transaction and IRS posting. Identify whether a debit failed, a payment was returned or money went to another period. Ask what must be corrected and confirm the resulting account and agreement status. |
| Another tax liability remains unpaid | Identify the tax type, period and amount named by the IRS. Discuss how it affects the agreement and what payment or revised arrangement is required. A payment toward the old installment does not, by itself, settle a separate new liability. |
| Requested financial information was not supplied | Find the actual request, deadline and documents required. Retain what you submitted and its delivery evidence, then confirm whether the IRS received it and what remains outstanding. |
| Financial information or the payment amount needs review | Identify the information the IRS considers incomplete or inaccurate, or the revised payment it says was not met. If your ability to pay changed, prepare the applicable current financial records and request a review rather than silently substituting a lower payment. |
The IRS manual on defaulted agreements identifies grounds for default and the facts considered for reinstatement. Filing, current withholding, estimated payments or business deposits can also need attention during that review. Establish the specific requirement involved instead of assuming every compliance problem has the same correction.
Read the amount and response date carefully
The amount needed to address the immediate default can differ from the full remaining tax balance. Identify what each amount on your actual notice represents. Do not assume either a routine monthly payment or the total on an earlier bill is the amount needed now.
The IRS CP523 page says to contact it as soon as possible, no later than 30 days from the date of the notice. Read the termination date and appeal instructions on the document you received. Do not start a fresh 30-day period from the day you opened the envelope.
Use the contact information on the notice. Explain the stated reason, the records you have and any correction already made. If a date appears wrong or the notice arrived late, raise those facts promptly; this guide cannot determine their effect on an individual deadline.
Confirm what the IRS recorded
The IRS expressly tells taxpayers who already took corrective action to call and ensure it has a record of that action. Keep the payment confirmation or submission evidence, the date of contact and the explanation of what will happen next.
Before treating the matter as resolved, establish:
- Whether the payment or document reached the correct account and period.
- Whether another reason for default remains unresolved.
- Whether the IRS considers the agreement reinstated, revised or still subject to termination.
- What amount, date and method apply to the next payment.
Reinstatement may involve a fee or resolving a new liability. The appropriate conditions depend on the case. The manual distinguishes curing a default before termination from reviewing an agreement after it has terminated; it does not make every new payment an automatic reinstatement.
If the old payment is no longer sustainable, explain the changed circumstances and provide the financial information the applicable review requires. Where necessary living expenses are the problem, hardship collection status concerns a separate financial assessment. It is not an automatic consequence of a defaulted agreement.
Appeal the actual agreement action
The Collection Appeals Program, or CAP, covers proposed termination and actual termination of installment agreements. Publication 1660 describes a 30-day appeal period from the notice of intent to terminate and a further 30-day period after termination. If you appeal before termination, you cannot appeal that same decision again simply because the termination later takes effect.
Identify the action and applicable instructions promptly. Do not rely on a possible later period as a reason to leave the current notice unanswered.
Use the submission route that applies
Publication 1660 says a termination appeal request need not be in writing unless the notice was sent by a revenue officer. In that case, the request must be written, preferably using Form 9423, Collection Appeal Request.
For a written installment-agreement appeal, Form 9423 instructs submission to the office or revenue officer that took the action within 30 calendar days. Do not send it directly to Appeals. A manager conference is recommended where possible but is not a prerequisite for this installment-agreement appeal route.
A call discussing payment is not automatically a request for an appeal. If you use an oral request permitted by the applicable instructions, clearly identify the action you want to appeal and keep a record of the request. Where a written submission is required, retain the signed request, supporting copies, destination and sending evidence.
CAP is distinct from Collection Due Process. A CAP decision does not carry the same ordinary judicial-review route as a CDP determination, although other review opportunities may exist for a particular issue. If a separate LT11 or Letter 1058 offers hearing rights, examine that document’s instructions and deadline separately.
Keep collection action and ongoing charges separate
For the covered tax periods, Publication 1660 says the IRS cannot levy until 30 days after termination of an installment agreement. If you appeal within that 30-day period, levy is prohibited until the appeal is completed, unless the IRS believes collection is in jeopardy. This protection and the response or appeal deadline are separate facts to track.
For agreements monitored through the IRS Integrated Data Retrieval System, IRM 5.14.11.4 instructs the IRS not to issue levies on periods included in the agreement for 90 days after mailing CP523. That procedural period incorporates the proposed-termination and post-termination periods and internal mailing allowances. It does not give you 90 days to correct the default or request an appeal, or add mailing days to the taxpayer deadlines stated above.
Identify the actual agreement stage and covered periods when asking how these restrictions apply. They are not a personal calendar predicting the earliest levy date, an account-wide shield or a reason to leave CP523 unanswered.
These rules do not make an existing levy disappear. If a bank is holding funds or an employer is taking wages, address the bank levy or wage levy as an existing action. Do not wait for a predicted next letter or assume another payment stopped it.
The IRS payment-plan guidance explains that interest and applicable penalties can continue while tax remains unpaid. Correcting the agreement’s status and reconciling the amount owed are connected tasks, but they require their own records and confirmation.
Sources and scope
- IRS CP523 instructions: notice purpose, prompt contact, correction and reinstatement.
- IRM 5.14.11: default, termination, reinstatement and appeal distinctions. The posted manual has a March 2022 transmittal; relevant provisions retain their own earlier revision dates.
- Publication 1660: termination appeal procedures and distinctions between CAP and CDP.
- Form 9423 and instructions: the written collection appeal request, destination and installment-agreement instructions.
Sources checked November 13, 2026. This guide does not determine an individual’s deadline, agreement status, payment requirement or entitlement to reinstatement.