How defaults happen

  • A default can result from missed scheduled payments, not filing required tax returns, or failing to comply with other agreement terms (for example, not making estimated tax payments for current-year tax obligations). The IRS treats a default as a broken agreement and may resume stronger collection activity (IRS.gov – Payment Plans) [https://www.irs.gov/payments/payment-plans-installment-agreements].

Immediate steps to take if you default

  1. Read any IRS notices right away — they often explain why the agreement was defaulted and any deadlines.
  2. File any missing tax returns immediately. The IRS will not generally reinstate an agreement if returns are unfiled. (IRS Publication 594: The Collection Process) [https://www.irs.gov/publications/p594].
  3. Calculate and pay the missed payments (plus accrued interest and penalties) as soon as you can — curing the arrears is the fastest route to reinstatement.
  4. Contact the IRS to confirm account status and next steps (phone number appears on notices or see the Online Payment Agreement page) [https://www.irs.gov/payments/online-payment-agreement-application].

Common reinstatement options

  • Cure the default: If you can pay the missed amounts, you can often get reinstated to the original plan once the IRS records the payments. Be ready to provide proof (bank records, payment confirmations).
  • Request a new agreement: If you cannot immediately make up missed payments, you may apply for a new installment agreement online or through a tax professional. The IRS evaluates ability to pay and may require more documentation. See how to apply for an online agreement [https://www.irs.gov/payments/online-payment-agreement-application].
  • Modify terms or convert plan type: Switching to a direct debit installment agreement (DDIA) reduces missed-payment risk. Learn more about DDIAs and their benefits in reducing default risk (FinHelp: How Direct Debit Installment Agreements Work) [https://finhelp.io/glossary/how-direct-debit-installment-agreements-work/].
  • Alternative resolutions: If you cannot pay the full amount, consider a partial-payment installment agreement, Offer in Compromise, or requesting collection alternatives — these require detailed financial documentation and IRS approval (FinHelp: Negotiating a Partial-Payment Installment Agreement) [https://finhelp.io/glossary/negotiating-a-partial-payment-installment-agreement-what-the-irs-looks-for/].

What the IRS can and cannot do after a default

  • The IRS can withdraw the installment agreement and resume enforced collection actions such as levies or garnishments, file or release a tax lien, and continue to assess interest and penalties.
  • The IRS generally will not permanently block you from obtaining a new payment plan if you demonstrate ability and willingness to pay; reinstatement or a new plan is often possible when you act promptly (IRS – Payment Plans).

Documentation and evidence to support reinstatement

  • Proof of payments made to cure arrears (bank statements, cleared checks, payment confirmation numbers).
  • Filed copies of any previously unfiled tax returns.
  • A current financial statement if you request a reduced payment or a partial-payment plan (collection information statement, e.g., Form 433-F or Form 433-A, may be requested).

Using reasonable-cause relief and penalty abatement

If missed payments were due to circumstances beyond your control (serious illness, natural disaster, death in the family, or similar), you can ask for reasonable-cause penalty abatement — this does not automatically reinstate an agreement but can lower penalties and help negotiations (IRS – Penalty Relief) [https://www.irs.gov/payments/penalty-relief].

Prevention and best practices

  • Communicate early: Call the IRS as soon as you foresee trouble — proactive communication improves options.
  • Use automatic payments: A direct-debit plan reduces missed payments and administrative defaults (FinHelp: How Direct Debit Installment Agreements Work) [https://finhelp.io/glossary/how-direct-debit-installment-agreements-work/].
  • Keep current-year tax filings and estimated payments up to date — failure to comply with ongoing filing obligations can trigger default.
  • Maintain records: keep payment receipts and copies of all notices.

When to get professional help

If your account is subject to lien, levy, or complex collection issues — or if you need help preparing financial statements for a partial-payment plan or Offer in Compromise — consult a tax attorney, enrolled agent, or CPA with collection experience. In my practice I’ve seen timely professional intervention often preserve access to workable repayment options.

Related FinHelp resources

Sources and notes

Disclaimer

This entry is educational and not individualized tax advice. For guidance specific to your situation, contact a qualified tax professional or the IRS directly.