What Is a CP521 Notice From the IRS?
The IRS will send a CP521 notice to taxpayers who have not made their monthly installment agreement payment by the due date. Monthly installment agreements are established for taxpayers who owe money to the IRS for various reasons.
Failure to make a timely payment after receiving a CP521 notice means penalties and interest on the amount owed will begin accruing. Defaulting on a monthly installment agreement could also result in the IRS seizing assets or garnishing wages.
What Is the Due Date for My Installment Agreement Payment?
An installment agreement payment due date is the date the payment is due every month until the tax debt is eliminated. For example, if a taxpayer established the 25th of every month as the due date, the taxpayer is obligated to make the payment before or on that date.
If payment is not made by midnight of the 25th, the IRS will consider the payment past due. Within 30 days of a past due payment, the IRS will issue a CP521 notice to the taxpayer reminding them they need to make a payment on their installment agreement.
How Can I Make My IRS Installment Payment?
Upon receipt of a CP521 notice, you can make your installment agreement payment by mailing a check to the IRS (along with a copy of your notice), or by logging on to your IRS account and making your payment online.
Be aware that it can take between one and three weeks before an installment agreement payment credit is reflected on your account.
Is There a Penalty for a Late Installment Agreement Payment?
Yes, the IRS will charge a penalty if your installment agreement payment is past due. In most cases, that penalty is 0.25%. Failing to pay your monthly installment within two weeks after receiving a CP521 notice, however, can result in a penalty of at least 1% each month.
What kind of action the IRS takes on late installment agreement payments depends on individual circumstances. If the taxpayer has become unemployed, suffered a serious illness or accident, or can show other reasons why they are unable to make payments, the IRS may agree to delay payments. However, this delay does not stop interest and penalties from accruing on the total taxes owed to the IRS.
Taxpayers with a good history of making monthly payments on their installment agreement may have penalties reduced or forgiven if they miss one or two payments due to unforeseen events.
The IRS has a First Time Abatement program that considers rarely missed payments on a case-by-case basis to determine eligibility for dismissing penalties.
Can the IRS Terminate My Installment Agreement If I Miss a Payment?
CP521 notices sent by the IRS will contain a deadline date for late installment agreement payments. If no payment is received by this date, or the taxpayer does not contact the IRS about why they can’t make a payment, the IRS typically terminates the installment agreement.
When this happens, the IRS will demand full payment of the tax debt and take collections actions if the debt is not paid.
Severely delinquent installment agreement payments may result in the taxpayer getting an Intent to Levy notice from the IRS. This means the IRS plans to seize some or all of your property to pay off the tax debt.
What Should I Do If I Received a CP521 Notice but Already Paid?
The IRS offers an online Interactive Tax Assistant at https://irs.gov/help/ita to answer questions about CP521 notices, including what to do if you already made your installment agreement payment.
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