IRS Notice CP523A: What It Is and How to Respond

Logan Allec, CPA

Founder of Choice Tax Relief · Over 140,000 YouTube subscribers covering IRS and state tax relief, unfiled tax returns strategies, and general tax strategy.

Featured in Forbes, USA Today, NBC

YouTube Instagram TikTok

You set up an installment agreement with the IRS.

You’ve been making your monthly payments.

And now the IRS has mailed you IRS Notice CP523A — a “Notice of intent to terminate your installment agreement.”

What went wrong?

Here’s the answer, straight from the notice: “You haven’t met the terms of your installment agreement because you failed to pay a new tax liability.” In other words, the problem isn’t your monthly payments — it’s that a new balance due showed up on your account (usually from your most recent tax return), and your existing agreement doesn’t cover it.

Under the terms of every IRS payment plan, staying current with new taxes is a condition of keeping the plan.

A new unpaid year is a default.

The good news: the CP523A is a warning, not a termination.

You have 30 days to fix the problem and keep your agreement alive.

The bad news: if you do nothing, the IRS will terminate the agreement, your entire balance — all years, plus penalties and interest — becomes collectible at once, and this notice doubles as a notice of intent to levy.

Here is a redacted CP523A Notice that one of our clients received.

In this article, I’ll walk through a real CP523A section by section and show you exactly how to keep your payment plan — or replace it with something better — before the 30-day clock runs out.

IRS Notice CP523A At a Glance

CP521D vs. CP89 vs. CP523 vs. CP523A: The Installment Agreement Notice Family

If you’re on an IRS payment plan, these are the letters that track its health — from routine to critical:

The CP523 and CP523A are two flavors of the same emergency.

The difference is the trigger: miss your monthly payments and you get a CP523; keep paying faithfully but rack up a new unpaid tax year, and you get the CP523A.

IRS Notice CP523A Explained, Part by Part

Let’s walk through an actual CP523A — dated July 14, 2025, covering tax year 2022 — one section at a time.

(This is a redacted version of an actual notice one of our clients received — a CAF copy sent to us as the taxpayer’s representative.)

Part 1: “Notice of Intent to Terminate Your Installment Agreement”

The first page leads with a warning-triangle headline and one blunt sentence: you haven’t met the terms of your installment agreement because you failed to pay a new tax liability, and the IRS needs to hear from you within 30 days to prevent termination.

Note the tax year in the footer — 2022 on this client’s notice — and this detail from the billing section: the IRS sends a separate CP523A for each tax period you owe.

Part 2: What You Need to Do Immediately

The notice offers the two direct fixes, either of which saves your agreement:

• Pay the new liability: scan the QR code or log in at irs.gov/account and pay the new year’s balance from your bank account or by debit/credit card.
• Increase your monthly payment: use the Online Payment Agreement tool at irs.gov/opa to restructure your agreement so it covers the new balance.

Why these two options?

Because your current monthly payment amount was calculated for your old balance.

The new liability either needs to disappear (pay it) or be folded into a recalculated plan (restructure).

Part 3: If We Don’t Hear From You

Here’s what’s at stake if you let the 30 days lapse.

The IRS will terminate the agreement under Internal Revenue Code § 6159(b), you’ll have 30 days after termination to appeal, and if you don’t appeal in time, collection begins.

The notice spells out what collection means:

• Levy: the IRS has the right to seize your property — and once the agreement is gone, it can pursue the total unpaid liability (all taxes, penalties, and interest), not just the missed amounts.
• Federal tax lien: the IRS can file a Notice of Federal Tax Lien putting your creditors on notice of its claim against your property.

The boxed reminder at the bottom is important: you have the right to request a Collection Appeals Program hearing — more on that in Part 6.

Part 4: Options If You Can’t Pay

If you can’t pay the new year and can’t afford a bigger monthly payment, the notice lists three fallback paths:

• Partial payment installment agreement (PPIA): a payment agreement for less than the full amount you owe, based on what your finances can actually support.
• Offer in compromise (OIC): settle the entire debt for less than you owe — run the OIC Pre-Qualifier at irs.gov/offers, and see how we approach offers in compromise.
• Temporary collection delay: in financial hardship, the IRS may pause collection until your situation improves — what practitioners call currently not collectible status.

Part 5: Billing Summary

The billing summary shows the account as of the notice date — July 14, 2025 on this client’s notice:

Read that last line carefully: it’s the payoff for this tax year if the agreement is terminated — the sum the IRS will pursue in full, immediately, rather than in monthly installments.

Part 6: Your Right to Request an Appeal

This section does double duty, and it’s the legal heart of the notice.

First, it tells you the CP523A is your Notice of Intent to Levy under IRC § 6331(d).

After termination and exhausted appeal rights, the IRS can levy — and even if you’ve never received a Collection Due Process (CDP) notice, it’s permitted to seize your state income tax refund and serve certain specialized levies.

Second, it explains how to fight back: you can appeal any proposed or actual termination through the Collection Appeals Program (CAP) — call the number on the notice or file Form 9423 (Collection Appeal Request).

Publication 1660 covers the timeframes.

The notice also gives you a Documentation Upload Tool link and personal access code for submitting your documents within 30 days.

Part 7: Failure-to-Pay Penalty

Under IRC § 6651, the failure-to-pay penalty accrues monthly on the unpaid tax — and the notice’s penalty table teaches a lesson worth knowing.

It shows $2,013.00 of unpaid 2022 tax accruing at 0.5% per month — and then a second line where the rate jumps to 1.0% per month.

That doubling happens after the IRS issues an intent-to-levy notice and the balance still isn’t resolved.

(The flip side: while a payment plan is in good standing, the rate is cut in half, to 0.25%.)

In other words, a defaulted agreement literally makes your balance grow four times faster than a healthy one.

Part 8: Interest

Under IRC § 6601, interest compounds daily on the unpaid balance from the return’s original due date, and the IRS can’t remove it for reasonable cause.

The notice’s interest table runs eight periods — from April 15, 2023 through the July 14, 2025 notice date — at annual rates moving between 7% and 8% as market rates changed, totaling $468.28.

(The billing summary’s smaller interest figure reflects accruals since the previous balance-due notice; the table shows the total.)

Part 9: Where to Find More Information

The final informational section points you to your online account for payment plan details, the enclosed Publication 594 (IRS Collection Process), and the phone number for questions.

One paragraph deserves attention: the third-party contact notice.

The IRS is telling you that during a stated one-year window it may contact other people — a neighbor, a bank, an employer — to verify information or take collection action against property they hold for you.

That’s standard language required by law, but it underscores how real the collection phase is once an agreement dies.

The last page closes with the Taxpayer Bill of Rights, the Taxpayer Advocate Service, and Low Income Taxpayer Clinic information.

When Does the IRS Send Notice CP523A?

You’ll get a CP523A when you have an active installment agreement and a new tax liability posts to your account unpaid — most commonly the balance due on your latest filed return.

Staying current on new taxes is a standing condition of every installment agreement, so the new unpaid year triggers a default even if you’ve never missed a monthly payment.

The IRS sends one CP523A for each tax period you owe, and each gives the same 30-day window before termination.

What Should You Do After Receiving Notice CP523A?

Here’s the playbook, in order of preference.

Step 1: Move Inside the 30-Day Window

Everything is easier while the agreement is still alive.

Mark the deadline — 30 days from the notice date — and act before it.

Once termination takes effect, you’re negotiating from a much weaker position, with the IRS free (after your appeal window) to pursue the entire multi-year balance at once.

Step 2: If You Can, Pay the New Liability

The cleanest fix: pay the new year’s balance at irs.gov/account, and your existing agreement continues untouched.

If you can pay most of it, pay what you can and call the IRS about the remainder — a small residual is far easier to fold into your plan than a full year’s liability.

Step 3: If You Can’t Pay It, Restructure the Agreement

Use the Online Payment Agreement tool at irs.gov/opa (or call the number on the notice) to add the new balance to your agreement and recalculate the monthly payment.

This is what our installment agreement work handles day in and day out — including negotiating payment amounts that actually fit your budget.

Step 4: If Even That’s Unaffordable, Downgrade — Don’t Default

If your finances have genuinely deteriorated, don’t let the agreement die by silence.

The notice’s own menu — partial payment installment agreement, offer in compromise, or currently not collectible status — all resolve the account based on what you can actually pay.

Every one of them beats a terminated agreement and active levies.

Step 5: If You Disagree — or the Agreement Gets Terminated — Appeal

The Collection Appeals Program exists for exactly this.

File Form 9423 (or call the number on the notice) to challenge a proposed termination, or within 30 days after an actual termination.

While a timely CAP appeal is pending, levy action on the disputed agreement stays on hold.

IRS Notice CP523A: Frequently Asked Questions

Patrick M.★★★★★

“I reached out to Choice Tax Relief with a significant tax situation that was approaching a level of liens and wage garnishments. LuLu was my case manager and from the first conversation was professional and reassuring.”

✓ Verified Google Review

See all Google reviews →

Author:

---

Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

• 
• 
•