A CP521 notice is a statement sent by the IRS outlining your payment that is due soon, or when you have a missed payment on an installment agreement. The IRS has not received a payment from you recently and, according to their systems, you are being watched closely if further payments are missed.
These specific terms will be outlined on your CP521:
- Your remaining balance
- Your accruing interest amount
- The date that you must remit payment in full
- Any penalties or cancellation terms for the agreement
If you received this notice, it is very important to respond or else you could face a multitude of consequences. The first of which is a possible cancellation of your installment agreement. If you fail to send your payment in a timely matter after receiving a CP521, your repayment plan will be nullified.
A canceled repayment plan has a lot more consequences than one may think. The first of which is that your failure to pay penalty will rise from 0.25% to 0.5% per month the amount owed is carried on.
The failure to pay penalty is automatically tagged on to your installment agreement, which is 0.25% per month for the duration of the plan.
In addition, a default on a repayment plan could cause the IRS to cancel the installment with no option to reinstate and require the taxpayer to pay the full balance immediately.
It is important to know that a CP521 is not a seizure of assets, but it is a hint that you need to follow up with the IRS immediately. Whether it is following up with your overdue payment or contacting the IRS directly to revisit your payment plan, communicating with the IRS will only help you.
If you are looking into applying for an installment agreement, it is recommended you call a tax professional to assist in getting a reasonable monthly rate.