What are the most common reasons an installment agreement defaults?

The three most common causes of installment agreement default are: (1) missing a monthly payment — even a single missed payment can trigger a CP523; (2) incurring a new unpaid tax liability for a new tax year while an existing agreement is in place; and (3) failing to file a required tax return on time. The terms of every installment agreement require that you remain current on both future payments and future filing and payment obligations.

Can I appeal if the IRS terminates my installment agreement?

Yes. You can appeal a proposed or actual termination through the Collection Appeals Program (CAP) by filing Form 9423. The CP523 notice gives you 30 days to cure the default before termination, and after termination you have an additional 30 days to appeal — giving you up to 76 days total from the notice date to file a CAP appeal. A CAP appeal is different from a Collection Due Process (CDP) hearing — CAP decisions cannot be appealed to Tax Court.

If I cure the default during the 30-day window, is my agreement automatically reinstated?

Not necessarily. Paying the missed amount during the 30-day window may prevent termination, but you should contact the IRS directly to confirm your agreement is back in good standing. The IRS may require you to verify compliance or submit updated information. In some cases, the IRS may require you to set up a new agreement — which could come with a reinstatement fee and potentially different terms if your financial situation has changed.