CP523: IRS Warning of Repayment Plan Termination and Asset Seizure

CP523: What You Need to Know About IRS Repayment Plan Termination

The CP523 is a serious letter from the IRS notifying you that your repayment plan may be terminated due to a missed payment or non-compliance. If you’ve missed a payment or failed to meet other terms of your agreement, you are at risk of the IRS seizing or levying your assets.

Why You Received the CP523 Notice

If you’ve received a CP523, it likely follows a previous CP521 notice, which was a warning about missed payments. Common reasons for defaulted payments include:

• Failure to make a payment (the most common reason)

• Failure to submit required information to the IRS

• Failure to pay the required monthly installment amount

What Happens After Receiving CP523

Receiving the CP523 does not mean your agreement is automatically terminated. However, it does place your account into "default status," which can potentially be reversed through a CAP appeal. If the appeal is successful, you may be able to reinstate your repayment plan and avoid more severe consequences.

How to Submit a CAP Appeal

You have 30 days to submit a CAP appeal after your agreement is terminated. It is crucial that you reference the date on the notice, not the date you received it, as late appeals will not be considered.

Remember, submitting an appeal doesn’t guarantee that your repayment plan will be reinstated, but it does give you an opportunity to resolve the issue without facing immediate, severe action from the IRS.

Consequences of Ignoring the CP523

If you ignore the CP523 notice, the IRS will take more aggressive steps to collect the debt, including:

• Tax liens

• Wage garnishments

• Seizure of assets

However, there are options available to help mitigate the impact:

• Negotiate a lower monthly payment with the IRS

• Apply for an Offer in Compromise (OIC) to reduce the debt

• Declare Chapter 7 Bankruptcy if applicable

• Declare financial hardship status to reduce your liability

Why It’s Critical to Act Now

Being on a repayment plan with the IRS is a step in the right direction, but neglecting to make payments or follow the terms can lead to dire consequences. If you’re having trouble keeping up with your payments, reach out to a tax professional for guidance on how to proceed.

Suggested Image for This Blog

For the top of this blog, consider an image that visually emphasizes the seriousness of the CP523 notice and its potential consequences. Here are a few ideas:

• IRS Notice and Asset Seizure: An image of an IRS CP523 notice with an image of a home or personal assets in the background, symbolizing the risk of seizure.

• Concerned Taxpayer and Notice: A person looking concerned while holding the CP523 notice, with financial paperwork scattered on the table, highlighting the urgency.

• Warning Label: A strong visual with a warning symbol next to the CP523 notice, signaling the potential legal actions like levies or liens.