IRS Notice CP523: What to Do Before Your Payment Plan Is Terminated
An IRS payment-plan default notice calls for a prompt response. Learn how to check the reason and deadline, correct the problem, request a workable change, or dispute the proposed termination.
By Brandon Lynch, EA
Updated September 2026
Start with your notice. CP523 means the IRS considers your installment agreement in default and intends to terminate it. It does not necessarily mean the agreement has already ended or that a levy is scheduled for a particular day. The IRS says to contact it as soon as possible and no later than 30 days from the notice date. Follow the dates, number, and instructions on your own notice.
Read the reason the IRS gives and the date on the notice.
Compare that reason with your payment, filing, and account records.
Determine whether you can correct the problem and gather proof of what you have done.
Contact the IRS using the notice instructions, even if you already made a payment. Ask whether the agreement is still in effect and what remains to resolve the default.
If you disagree or cannot resolve the issue, ask about appeal rights before the applicable deadline. Consider representation if the account or collection risk is complicated.
Why did I receive CP523?
The notice should tell you why the IRS believes the agreement is in default. Under IRS procedures, grounds include a missed installment, a new tax liability left unpaid when due, failure to provide an updated financial statement when requested, inaccurate or incomplete information provided before the agreement, or failure to pay a modified installment amount. You can therefore receive CP523 while making payments on the original balance.
Check the item that matches your notice:
Payments: Was an installment missed, a direct debit rejected, or a payment not yet credited? Keep payment proof.
New taxes: Did a new liability arise? Review withholding, estimated payments, or business tax deposits as applicable.
Information or changed terms: Did the IRS request updated financial information or change the payment amount? Find the request and your response.
Identify any unfiled returns too. Filing compliance can matter when the IRS evaluates a way forward, but the Internal Revenue Manual says a delinquent return by itself does not default an existing balance-due installment agreement. Establish the actual reason for your CP523 rather than assuming every filing issue caused it.
Has my payment plan already been terminated?
Usually, CP523 is a proposed termination. The agreement is not terminated merely because the notice was issued; in the ordinary process, termination follows the 30-day period beginning on the notice date if the default is not cured or timely appealed. An older notice may describe an agreement that has since ended. Ask the IRS to confirm its current status and the tax periods involved.
Can I correct the default?
Often, but the needed action depends on the reason. If the problem is a missed installment, the IRS says making the required payment before the termination date can prevent termination. If the issue is a new unpaid tax liability or missing financial information, that payment alone may not fix it. The IRS may require another action, including addressing the new liability or providing records.
If you have already acted, still call the number on CP523. Ask the IRS to confirm that it recorded the correction, whether any other default reason remains, and whether the agreement is in effect. IRS procedures call for reinstating an agreement that is in default but not yet terminated when the taxpayer remedies the default and there is no other reason for default. Reinstatement after actual termination can require a different review.
Can I change or reinstate the payment plan?
First find out which situation applies:
The agreement is active: Eligible taxpayers may be able to change a payment amount or due date online. See the IRS payment-plan guidance for eligibility and instructions.
CP523 proposes termination: Follow the notice and ask what will resolve the stated default or permit a revised arrangement. An online change should not be assumed to dispose of CP523.
The agreement has terminated: Ask whether it can be reinstated or whether a new arrangement is needed. The IRS lists online reinstatement after default as an available account function, but eligibility and required documentation depend on the case; a fee may apply.
If the proposed payment does not meet IRS requirements, the online process may direct you to provide a collection information statement. If you cannot make the change online, follow your notice and contact the IRS. For a broader comparison of arrangements, see Lynx Tax Advisors’ IRS Payment Plans page.
What if the payment is no longer affordable?
Tell the IRS what changed and be prepared to support an amount you can maintain. Review may involve income, necessary expenses, assets, and current tax obligations. The IRS may request a financial statement or records. A payment that covers old debt but creates new unpaid taxes may lead to another collection problem.
What if I disagree with the IRS?
Call the number on CP523 with payment records, correspondence, or other proof. Ask the IRS to explain the stated reason and confirm whether it has recorded any corrective action.
If the issue remains unresolved, the Collection Appeals Program can review a proposed termination and, separately, an actual termination. IRS Publication 1660 describes an appeal request within 30 days of the notice of intent to terminate. If the agreement is then terminated, an additional 30-day appeal period after termination applies. An appeal decided before termination cannot simply be repeated after termination. If a Revenue Officer sent the notice, the appeal request must be in writing, preferably on Form 9423. Follow your notice’s instructions and confirm the deadline for your situation; do not rely on the later period when you can respond during the first.
Can the IRS levy after CP523?
CP523 warns that collection action may follow if the default is not resolved. It does not mean a levy will occur on the notice date or immediately when the first 30 days pass. For the tax periods included in the agreement, levy is generally restricted during the proposed-termination period, for 30 days after an actual termination, and while a timely appeal is under review. Exceptions, including jeopardy situations, can apply. Other tax periods and existing collection actions require their own review.
A federal tax lien filing is a different action from a levy and has different rules. The practical response is to establish the agreement’s status and address the notice, not to calculate a personal levy date from a general article.
What if a Revenue Officer is assigned?
An assigned IRS Revenue Officer may review why the agreement defaulted, what the financial records support, and whether current filing and payment obligations are being met. Use the contact instructions on your notice and keep track of commitments you make.
From my IRS Collection experience
From my years in IRS Collection, I learned that communication before a deadline could change how a case progressed. A taxpayer who provided the records available and explained when the rest would arrive gave me something to evaluate. When communication stopped after a missed commitment, I had less current information to evaluate the taxpayer’s circumstances and determine an appropriate path forward. As a supervisor, I also looked for a recommendation the file supported and a resolution the taxpayer could sustain.
I explain that field and supervisory perspective in more depth in What I Looked for as an IRS Revenue Officer — and What Changed When I Became a Supervisor.
When professional help may make sense
Consider help if you cannot tell whether the agreement is still in effect, dispute the IRS’s reason, cannot afford the current payment, have an assigned Revenue Officer, or need to evaluate an appeal or collection risk.
You can also contact the IRS directly at the number on CP523. Do not wait for a consultation to address a notice deadline. Have the notice, payment proof, and relevant financial records ready.
If you would like Lynx Tax Advisors to review the situation, Schedule a Consultation.
IRS resources referenced
Brandon Lynch, EA is Founder and Managing Member of Lynx Tax Advisors. His background includes nearly 20 years of IRS experience, including Revenue Officer and supervisory assignments. Lynx Tax Advisors is a private tax representation firm and is not affiliated with or endorsed by the Internal Revenue Service.
This article provides general educational information. The appropriate response depends on the notice and the taxpayer’s account.