Letter 2975 is a notice that your installment agreement has defaulted under IRC Section 6159(b). The default event could be a missed payment, a new tax liability you have not addressed, a return you have not filed, or a change in financial information you did not report when the agreement required it. Default triggers a 30-day protection window under IRC Section 6159(b)(5) before the agreement actually terminates.

The 30-Day Protection Window

During the 30 days after Letter 2975, the IRS cannot levy. This is a statutory protection. Use the window to cure the default: make missed payments, file missing returns, or address the new liability. Reinstatement during this window is generally straightforward and does not require a new financial statement.

If the default was caused by a missed payment, the simplest cure is paying the missed amount and the current month's payment. If it was caused by a new return filing with a balance due, you may need to either pay that balance separately or request that the balance be added to the existing agreement.

CAP Appeal Right

You have the right to appeal the default and proposed termination through the Collection Appeals Program using Form 9423. CAP is a faster, less formal review than CDP. The appeal does not create a long tolling period but does get a second look at whether default was proper and whether reinstatement should be allowed. CAP is often enough to preserve the agreement.

Letter 2975C is a related notice combining the default with a notice of intent to terminate. The practical steps are the same: cure the default within the 30-day window, request reinstatement, or file a CAP appeal with Form 9423. Terminated agreements can sometimes be reinstated, but the process is more involved after termination and generally requires updated financial information.

If you received Letter 2975, call us at (813) 229-7100. The 30-day window closes fast and the cost of letting an agreement terminate is much higher than the cost of reinstating during the protection period.