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IRS AUDITS & TAX NOTICES

What is the IRS Notice CP 521?

Jo Willets, EA Director of Tax Resources, Jackson Hewitt Published On March 16, 2020

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An IRS Notice CP521 is a common letter reminding you that your monthly installment payment to the IRS is due. Receiving this notice shouldn’t come as a surprise to you, because it relates to an installment agreement you made with the IRS to pay a tax debt or amount due. When you receive this notice, it’s been sent to remind you what your monthly payment is, when to pay it, and how much you still owe (your remaining balance).

What should you do if you receive a CP521 Notice?

  • Read the notice carefully: Take note of the amount due and the due date.

  • Pay your amount due by the due date on the notice, OR

  • Pay what you can by the due date, AND

  • Contact the IRS as soon as possible If you cannot make a payment by calling 1-800-829-1040.

How do I make an installment payment to the IRS?

If you’ve already been making payments, you have probably found a way that works best for you, but if this is your first payment, or you need to pay a different way than before, the following payment methods are all accepted by the IRS:

  • Pay from your bank account online(this form of “direct pay” is fast and recommended)

  • Electronic Funds Withdrawal (EFT)—you may have set this up when e-filing your taxes or go to irs.gov to set up

  • Pay with debit or credit card online. This is a fast way to pay, however, you pay the card vendor fees

  • Check, cashier’s check, or money order—there should be an enclosed envelope to use. Be sure to tear off and send the bottom part (Payment voucher) of the notice with your payment, made payable to U.S. Treasury 

  • Cash (at a store that partners with the IRS). Note that these payments still take 2 business days to post, will cost you $3.99 each, and require that you set them up in advance before going in to pay

  • Same-day wire transfer—find out more from your bank; they usually charge a fee for this service)

  • Electronic Federal Tax Payment System (EFTPS)—this type of payment is for businesses or individuals and is recommended when you have regular or large amounts to pay; enrollment before making a payment is required

Can you send your payment by mail?

It is recommended not to mail payments, if possible. There are a few reasons for this; mailed payments take a lot longer to be processed and there’s more chance of them arriving late. If you do decide to pay via mail, avoid using cash or, if you have to, follow the detailed instructions on sending tax payments by mail. 

What if you can’t pay the installment amount?

If you cannot pay the monthly amount you originally agreed to as part of an installment agreement or offer in compromise , you may be able to reduce your monthly amount due. When you call, be prepared to show the IRS proof of how your financial circumstances have changed since you originally made this payment plan. 

It’s important to make your payment on time every month, or to revise your agreement with the IRS. Otherwise you can end up paying extra interest and penalty fees.* You may also default on your installment agreement. If this happens, the IRS can seize your assets (place a levy on your accounts). 

 *If you have defaulted on your installment agreement, your CP521 may come with a Notice 746 listing the estimated tax penalties that have accumulated on your account since it was opened. 

If the IRS intends to terminate your installment agreement, you will receive notice CP523; to avoid default, it’s important you pay the amount due by the date or call them immediately to discuss why you may be unable to pay.

How to revise your installment agreement with the IRS

It’s easier (usually) than you might think to change your installment agreement. Did you know? You can review your plan type, due dates, and amount due online! You just need to log in to the IRS Online Payment Agreement tool to view the above and make changes.

Here are some actions you can take using this tool:

  • Change your due date and your monthly amount due** 

  • Convert an existing agreement into a Direct Debit agreement

  • Get your agreement reinstated after defaulting (involves a fee)

**If the amount you enter does not meet IRS minimum payment requirements, you will be asked to enter a higher amount. If you can’t make the required minimum payment, you will be asked to complete Form 433-F to detail your financial situation and help the IRS determine what you should be paying. Contact Jackson Hewitt if you need help filling this form out.

CP521 Tips:

Keep track of your due date for IRS installment payments on a calendar or set a reminder in your phone.

Set up automatic payments from your bank account and make sure you have enough in your account before your payment is due to debit.

If you think you will have an issue paying an installment, call the IRS to revise your plan and avoid extra fees and default.

What if I still have questions?

First, you can always call the IRS at the number located on the top of your notice. If that doesn’t help, or you still need more information or help, consult a tax debt resolution specialist at Jackson Hewitt! We can help you stay on top of your payments, respond to the IRS, and figure out the best way to minimize extra fees, keep your account in good standing with the IRS, and eventually pay off your remaining balance.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

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