The IRS defines a breach of an installment agreement as the provision of inaccurate or incomplete information, or the failure to comply with the required terms of the agreement. In this case, the IRS may propose the termination of the installment agreement and the terminated installment agreements. I have helped clients resolve their problems with the installment agreement and prevented the IRS from terminating the agreement. The IRS defines a breach of an installment agreement as the taxpayer providing inaccurate information or the taxpayer not complying with the terms of their agreement.
If you don't respond to IRS Notice CP 523 within 13 weeks (basically 90 days), the IRS will change the status of your account. For example, if you have an installment agreement for one year and you file a return and owe the following year, the IRS will not give you a separate payment plan for the new balance of the return you owe. For those who don't comply with an IRS payment plan or an “installment” agreement, there are a few options to get back up to date with the IRS and avoid forced collection activity (taxes and levies). If the IRS believes that you are not taking your installment payment seriously; if, after the fact, it discovers that you submitted erroneous information on your application or simply stop paying, you will be considered to have been in default.
To avoid this, contact the IRS or ask a tax professional to reinstate your payment plan as soon as you receive notification of non-compliance with your payment plan from the IRS. If a taxpayer is not in good standing with the IRS within 90 days, they may face forced collection from the IRS. A taxpayer whose installment agreement is overseen by IDRS will receive Notice CP 523, Late Installment Agreement: Notice of Intent to Collect. If the IRS terminated your payment agreement by mistake or you disagree with the amount owed, contact the IRS at the number at the top of the letter.
If the taxpayer ends up not complying with their installment plan and becomes subject to collection activity, this is probably one of the first places where the IRS will file a tax action. Within the next 30 days after the CP523 notification, you can reinstate the installment agreement to avoid IRS levies. The IRS may propose termination if the taxpayer fails to make an installment payment when due, does not pay another tax liability, does not provide an updated financial statement, provides inaccurate information, and does not pay a modified payment based on the updated information submitted. If the IRS determines that the agreement must be breached, it will issue a letter to the taxpayer notifying them of its determination.
The important thing to remember is that the main condition of your installment agreement is that you make all your payments in the agreed amount on time.
