Do you have an existing installment agreement with the IRS? If so, you may find yourself on the receiving end of a CP521 notice on occasion. What does this notice mean? Should you take any action upon receiving a CP521 notice?

What is a CP521 Notice?

In essence, a CP521 notice serves as a reminder that a payment is due on an IRS installment agreement. The notice generally states the amount due, the due date, and the remaining balance on your account.

On occasion, a CP521 notice may include an additional statement called Notice 746. This form lists any interest or estimated tax penalties that have accrued on the account since initiation. If you have questions or concerns, the IRS usually provides a contact telephone number.

When Does the IRS Send a CP521 Notice?

The IRS will only issue a CP521 notice when at least one payment has been missed on an installment agreement. While the notice does not signify the beginning of collection action, it does show that the agency is aware that a payment has been missed.

However, it can take a couple of weeks for the missed tax installment agreement payment to be noticed by the IRS. If you forget to send a payment on the due date and you remit one within 30 days of the original date, you probably will not receive a CP521 notice at all.

Why Respond to a CP521 Notice?

Regardless of when you actually receive a CP521 notice, it is in your best interest to respond to the notice as soon as possible. Failing to send a timely payment after receiving a CP521 notice may cause the IRS to void the installment agreement.

If your installment agreement is rescinded, your failure-to-pay penalty will double from 0.25% to 0.5% for each month the balance is carried forward. In addition, defaulting on your installment agreement could cause IRS to rescind the installment plan and demand full payment of the entire tax balance now.

You can respond to a CP21 notice by remitting a payment right away. Send a check or money order for the amount due in the enclosed envelope. Before you seal the envelope, make sure that you include the payment voucher at the bottom of the notice. Your Social Security number is printed on the voucher, which helps ensure that the IRS will credit your account with a payment.

If you receive a CP521 notice in the mail, you don't have to worry about the IRS seizing your assets. However, you do need to respond right away by sending in a payment to agency as soon as possible. Doing so can help you keep your account with the IRS in good standing.