IRS CP523 Notice: Installment Agreement Default — Intent to Terminate

What a CP523 actually means

The three usual triggers: a missed/late installment, a new balance from a recent return, or an unfiled return. Any of them voids the deal you had.

Caught within the window, this is very fixable — reinstatement is routine, often without re-proving finances. Ignored, the full balance accelerates and levy rights revive after 30 days.

How to recognize a real CP523

IRS Collection sends the CP523 when an installment agreement defaults. Internal Revenue Code section 6159(b) requires the IRS to give written notice and 30 days to fix the default before it ends the agreement. The same notice also serves as the notice of intent to levy required by section 6331(d).

• The headline has three lines: "Notice of intent to levy," "Intent to terminate your installment agreement," and "Payment Due Immediately" with a dollar amount.
• The Billing Summary shows two very different numbers: the past-due installment amount needed to prevent default, and the much larger "Total amount due if we terminate your installment agreement and you exhaust your appeal rights."
• You may get one CP523 for each tax period in the agreement. The IRS notes that the past-due amount only has to be paid once to reinstate.
• It explains your right to appeal the proposed termination under the Collection Appeals Program, using Form 9423, and points you to Publication 1660.
• The "What you need to know" section lists property that can be levied, including wages, bank accounts, business assets, your car and home, and Social Security benefits. It also includes the passport warning for seriously delinquent debt.

What to do, step by step

1. 1Identify the default reason (it's stated on the notice).
2. 2If it was a missed payment, pay it now and call to reinstate the agreement.
3. 3If a new tax year created debt, ask to roll the new balance into a revised agreement.
4. 4If a return is unfiled, file it immediately — reinstatement requires filing compliance.
5. 5Act inside the 30 days: reinstating before termination is dramatically easier than negotiating after levies restart.

Mistakes that make a CP523 worse

• Paying the past-due amount separately on each CP523 you get. One payment of the past-due amount covers the whole agreement.
• Waiting until after termination to appeal. You can appeal under the Collection Appeals Program as soon as termination is proposed, within 30 days, and again after termination. Acting early is easier.
• Assuming the levy threat is only about the missed installment. If the agreement ends, the IRS can go after the entire unpaid balance, not just the overdue payments.
• Fixing the payment but not the real cause. If the default came from a new balance or an unfiled return, paying the installment alone won't keep the agreement in place.

What happens if you ignore a CP523

The IRS ends the installment agreement 30 days after the notice date. Federal law bars a levy while the agreement is in effect, for 30 days after it's terminated, and while a timely appeal of the termination is pending (IRC 6331(k)). After that, levy can resume. If you were already sent a Collection Due Process notice (such as an LT11 or CP90), the IRS can levy wages, bank accounts, and other property. If not, it can at first take only your state tax refund, until it sends a CDP notice. The IRS may also file a Notice of Federal Tax Lien.

Common questions

Checked against IRS primary sources — see how we source these guides. You can verify any notice directly at IRS.gov. The dates and instructions printed on your specific notice always control. Official IRS explanation: Understanding your CP523 notice (IRS).

• IRS: Understanding your CP523 notice
• IRS sample Notice CP523 (PDF)
• IRM 5.14.11, Defaulted and Terminated Installment Agreements

Go deeper

• Payment plan denied or defaulted? How to fix it (and the CP523 clock)
• Can you add new tax debt to an existing IRS payment plan?
• IRS payment plans: how installment agreements really work