IRS Notice CP523: Installment Agreement Default - How to Reinstate

Your installment agreement can default for several reasons:

• Missed payments - Usually 2 or more missed monthly payments
• New tax balance - You owe additional taxes from a new return or audit
• Unfiled returns - You didn't file a required tax return while on the plan
• Bounced payment - A payment was returned for insufficient funds
• Financial information not provided - You didn't respond to an IRS request

The notice should specify which reason applies to your situation.

Reinstatement is usually possible if you act within 30 days:

For Missed Payments

Pay the missed amount(s) and call the IRS to request reinstatement. You may need to set up automatic payments (Direct Debit) going forward.

For New Tax Balance

You'll need to either pay the new balance or have it added to your installment agreement. The IRS may increase your monthly payment.

For Unfiled Returns

File all missing returns and call to request reinstatement. You'll also need to address any balance due from the newly filed returns.

Reinstatement Fee

There's a $89 fee to reinstate a defaulted agreement ($43 for low-income taxpayers).

If your installment agreement terminates:

• Full balance becomes due - All payment plan protections end
• Collection resumes - Levies, liens, and other enforcement actions
• Penalty rate increases - The failure-to-pay penalty goes from 0.25% back to 0.5% per month
• Harder to get a new agreement - The IRS may require more documentation or stricter terms