It usually does not happen without a reason. However, the IRS Notice CP523 – Intent to Terminate Your Installment Agreement – often leaves a taxpayer wondering about what might have happened for the IRS to suggest that an Installment Agreement is about to default. The most obvious reason would be a missed payment, but what if all payments have been made in full and on time?
When the IRS accepts a repayment agreement with a taxpayer, the Service promises not to attempt to collect the debt by any enforcement action. On the other hand, a taxpayer is informed that all tax obligations from that point forward have to be paid in full and on time. In addition, all tax returns have to be filed on time.
If you received the IRS Notice CP523, the first thing you need to do is to find the reason that caused this problem. You can do it yourself by calling the number indicated on the Notice, or ask your tax resolution representative to do that on your behalf. If all Installment Agreement payments have been made on time, then the next thing that you need to check is whether there are any outstanding tax returns that still have to be filed. You should also verify if all payments on returns, which became due after your agreement was finalized, have been made in full and on time. This is one reason why you should keep copies of all correspondence between you and the IRS, together with your mail delivery confirmations.
If you have not missed any Installment Agreement payments and have filed and paid all of your tax returns on time, then you have eliminated the most common causes for the Installment Agreement to default. However, there is something else that the IRS does not make very clear in its Terms of Installment Agreement – it is the fact that any new tax liability automatically defaults it.
Let’s say the IRS accepted an Installment Agreement for your 1040 – Income tax liability for the years 2006 through 2010. At some point after the agreement was approved, you got audited and the IRS assessed additional $150 for the year of 2009. The IRS sent you a letter stating that, but you have not paid attention to that letter because, as far as you were concerned, your 2009 liability was on a payment plan. However, any new tax liability (not penalties and interest, but the tax due amount) that is assessed after the Installment Agreement was approved terminates the agreement. Therefore, it would be a good idea to pay $150 to the IRS to make sure nothing is affecting your payment plan. However, there are also other ways to approach a situation like that.
If the additional balance is not large, you can full pay it within 30 days from the day of the Notice CP523, as was already mentioned above. Make sure to contact the IRS to confirm that your payment has been received and the IRS will not terminate the Agreement. If you cannot afford to full pay the additional balance, you can either ask the IRS to include it into the Installment Agreement, or, if your request is denied, let the agreement default completely and then submit a brand new payment plan proposal.
No matter which way you choose, it is advisable to talk to your tax resolution representative before taking a certain course of action. You can then decide if you would like to take care of the situation yourself, or might need help from a professional.
It usually does not happen without a reason. However, the IRS Notice CP523 – Intent to Terminate Your Installment Agreement – often leaves a taxpayer wondering about what might have happened for the IRS to suggest that an Installment Agreement is about to default. The most obvious reason would be a missed payment, but what if all payments have been made in full and on time?
When the IRS accepts a repayment agreement with a taxpayer, the Service promises not to attempt to collect the debt by any enforcement action. On the other hand, a taxpayer is informed that all tax obligations from that point forward have to be paid in full and on time. In addition, all tax returns have to be filed on time.
If you received the IRS Notice CP523, the first thing you need to do is to find the reason that caused this problem. You can do it yourself by calling the number indicated on the Notice, or ask your tax resolution representative to do that on your behalf. If all Installment Agreement payments have been made on time, then the next thing that you need to check is whether there are any outstanding tax returns that still have to be filed. You should also verify if all payments on returns, which became due after your agreement was finalized, have been made in full and on time. This is one reason why you should keep copies of all correspondence between you and the IRS, together with your mail delivery confirmations.
If you have not missed any Installment Agreement payments and have filed and paid all of your tax returns on time, then you have eliminated the most common causes for the Installment Agreement to default. However, there is something else that the IRS does not make very clear in its Terms of Installment Agreement – it is the fact that any new tax liability automatically defaults it.
Let’s say the IRS accepted an Installment Agreement for your 1040 – Income tax liability for the years 2006 through 2010. At some point after the agreement was approved, you got audited and the IRS assessed additional $150 for the year of 2009. The IRS sent you a letter stating that, but you have not paid attention to that letter because, as far as you were concerned, your 2009 liability was on a payment plan. However, any new tax liability (not penalties and interest, but the tax due amount) that is assessed after the Installment Agreement was approved terminates the agreement. Therefore, it would be a good idea to pay $150 to the IRS to make sure nothing is affecting your payment plan. However, there are also other ways to approach a situation like that.
If the additional balance is not large, you can full pay it within 30 days from the day of the Notice CP523, as was already mentioned above. Make sure to contact the IRS to confirm that your payment has been received and the IRS will not terminate the Agreement. If you cannot afford to full pay the additional balance, you can either ask the IRS to include it into the Installment Agreement, or, if your request is denied, let the agreement default completely and then submit a brand new payment plan proposal.
No matter which way you choose, it is advisable to talk to your tax resolution representative before taking a certain course of action. You can then decide if you would like to take care of the situation yourself, or might need help from a professional.