The IRS may terminate your installment agreement if you miss a payment or fail to stay in compliance with current tax filings and payments. Once your agreement is terminated, the IRS may take enforced collection actions, such as a wage garnishment or a bank account levy.
You should generally do everything you can to avoid an installment agreement termination. Contact a tax attorney if you need assistance renegotiating your agreement or reinstating your payment plan.
If you default on your agreement, the IRS will send a CP523 notice. This informs you that your installment agreement will be terminated if you don’t fix the problem within 30 days.
You could also get this notice if you incur a new tax liability and don’t pay on time. When you entered into your installment agreement, you promised to stay current on your new tax obligations in addition to making your monthly payments.
Act immediately if you receive a CP523 notice. Cure your missed payment or pay the new tax liability if you can. This should get your payment plan reinstated, but you may have to pay a reinstatement fee as well. If you send a late payment, make sure your plan is reinstated.
Appealing a Termination
You also have the right to appeal an installment agreement termination. If you don’t agree with the reason for the termination, you can request to have the IRS Appeals Office review your case.
The other benefit of requesting an appeal is that it delays the installment agreement termination and any resulting enforced collection actions. You have 30 days to request the appeal and avoid the termination. Then, while your appeal is being processed, the IRS won’t levy your assets or file a federal tax lien. Even if your appeal is rejected, you get an additional 30 days before the IRS will take enforced collection actions.
You can request an appeal using Form 9423, Collection Appeal Request.
Renegotiating Your Installment Agreement
If you can’t pay a new tax liability, you may be able to add the balance to your existing installment agreement. This is typically a simpler process that negotiating a whole new installment agreement.
Contact a tax attorney to get help avoiding a payment plan termination or renegotiating the terms of your IRS installment agreement.
The Gartzman Law Firm offers delinquent tax return preparation and tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.