If you have established an installment agreement with the IRS to eliminate outstanding tax debt, you may receive an occasional CP-521 Notice. This notice is a reminder that a payment is due, and will state the due date and remaining balance on your account. In addition, this notice may include an additional statement known as Notice 746. This notice is an official declaration of penalties or interest that have accrued to your account since initiating payment actions.
Why Did I Receive a CP-521 Notice?
The IRS issues this notice when at least one installment payment on your agreement has been missed. It does not mean the IRS is nullifying your payment agreement or initiating collection actions against you. It simply means they recognize a payment has been missed and are sending a friendly reminder. No other official actions are being taken at this time.
Due to the nature of any large bureaucracy, it can take several weeks for a missed tax installment to be noticed and a letter generated and mailed. If you inadvertently missed remitting a tax payment by the due date, but send one within the following 30 days, you may or may not receive notice of failure to pay. The IRS understands that everyone occasionally forgets things, even important items like tax payments.
How Should I Respond?
If you receive a CP-521 Notice in the mail you should take immediate steps to make the missed payment. Failing to remit a payment soon after receiving the notice may result in the IRS voiding your installment agreement and demanding payment in full. If your installment agreement with the IRS is canceled, a substantial penalty can be added to your outstanding debt. A Failure to Pay Penalty can mean adding 0.25% to 0.5% for each month the unpaid balance is carried forward.
Make your outstanding payment right away and be sure to include the payment voucher in the envelope with your check or money order. This voucher ensures the IRS will credit your payment to the correct account. Online payment arrangements are also available to make up late or missed payments. Prompt remittal of scheduled payments will keep your account in good standing and prevent any adverse actions by the IRS.
What Happens if I Don’t Pay?
Failure to pay your installment payments on time will result in increasing interest and penalties, and possible default of your account. At such a time, the IRS may rescind your existing agreement and initiate a levy to seize your assets in order to cover your debt. After violating an installment agreement with the IRS, you will find it significantly more difficult to negotiate another plan to repay your outstanding tax debt.
If you have received a CP-521 Notice from the IRS and are having difficulties making your installment payments, contact the tax professionals at Reliance Tax Group. We understand how to deal with the IRS on your behalf when payment arrangements become a burden. We refuse to hinder you further with hourly rates and hidden fees, preferring to work on a flat fee basis. Call (720) 452-2915 or contact us online to arrange a free consultation.