Letter 2975C is a combined notice: your installment agreement has defaulted and the IRS intends to terminate it. The 30-day protection under IRC Section 6159(b)(5) applies, so the IRS cannot levy during that window. But if nothing changes, the agreement terminates and the full balance becomes immediately collectible.
What Triggered the Letter
The notice should identify the default reason. The most common triggers are a missed payment, filing a new return with a balance due, failing to make required estimated tax deposits, or failing to provide requested financial information when the IRS asked for an update. Address the specific trigger named in the letter, not a guess.
Three Paths During the 30 Days
Cure the default: make the missed payment, file the missing return, pay the new balance, or submit the requested information. For a simple missed-payment default, this is usually enough.
Request reinstatement with modified terms: if the original agreement is no longer sustainable, you can propose new terms. A new agreement may require updated financial information on Form 433-A or 433-F and a user fee, but it keeps the account in a formal resolution.
File a CAP appeal using Form 9423: appropriate when you believe the default determination is wrong or when reinstatement is being denied improperly. CAP is faster than CDP and gets a settlement officer involved.
Why Not Just Let It Terminate
Termination means the IRS can levy as of day 31, interest and the failure-to-pay penalty continue to run against the full balance, and setting up a new agreement later requires updated financial information plus a user fee. If you were close to paying off, termination can even disqualify you from the streamlined agreement process. Keeping the existing agreement alive is almost always cheaper and faster than restarting.
If you received Letter 2975C, call us at (813) 229-7100. We work installment agreement defaults and reinstatements regularly.