The IRS has sent you a Notice of Termination (also known as a CP523), informing you that your payment plan has been canceled. Can you get your payment plan back, or is it gone forever? Fortunately, a canceled payment plan does not mean all is lost. You may be able to reinstate your payment plan or negotiate a new plan.
Top Reasons the IRS Cancels a Payment Plan
Once your payment plan is set up, it might seem like the hard work is over, but IRS payment plans have strings attached. You’re required to make prompt payments, stay current with your tax returns, pay new taxes incurred, update the IRS on changes to your financial situation, file for bankruptcy, file misleading or incorrect documents, and more.
Getting Your Payment Plan Reinstated
The Notice of Termination states that you have 30 days before the IRS will move forward with enforcing the collection of your tax debt. Here’s what you need to do to get your payment plan back.
Call the IRS
The first thing you should do after receiving the Notice of Termination is to call the IRS at the number provided in the letter or the general IRS phone number, 1-800-829-1040. IRS officials may be willing to reinstate your payment plan if you comply with a few conditions.
Address Why Your Plan Was Canceled
Often, you immediately rectify the issue that caused the cancellation. For example, if you missed a payment or failed to file this year’s tax returns, you must do that before the payment plan can be reinstated.
Pay the Reinstatement Fee and Resubmit Financial Documents
You will also need to pay a $89 reinstatement fee. Another condition or reinstatement will be resubmitting your financial disclosures, such as Form 433-A or 433-F. If your financial situation has changed, reinstating your plan may include a change in your monthly payments.
Negotiate a New Payment Plan
If you haven’t been following your payment plan, something isn’t working as expected. You can negotiate a new payment plan that better fits your financial situation.
How to Avoid a Lien, Levy, or Other Collections in the Interim
The best way to avoid the IRS collections process is to get back in compliance with your payment plan. As we mentioned above, this can include making a good-faith payment, filing missing tax returns, or rectifying any other issue that led to the cancellation.
If those actions aren’t possible for you, you do have a couple of other options. One option is to file a Collection Appeal Request (Form 9423) before the enforcement period begins, i.e., within 30 days of receiving your Notice of Termination.
Another option is to request to be placed on “Currently Not Collectible” status. This option is only available when a taxpayer is unable to make any payments toward their tax debt.
Getting back into compliance to reinstate or negotiate a new payment plan can be overwhelming. At Highland Tax Group, we help you get your payment plan reinstated or negotiate a new plan before the IRS takes further action against you.