Understanding Your IRS CP504 Notice
An IRS CP504 notice is an urgent, high-priority letter stating that the IRS intends to levy your assets due to unpaid federal taxes. This notice is a critical milestone in the IRS collection process. Unlike earlier demand letters, the CP504 serves as a final notice of intent to levy certain assets, such as your state tax refunds, and warns that the IRS may proceed with levying bank accounts or wages next. Understanding the immediate steps to take and your rights is essential to stopping an IRS levy.
What Is the CP504 Notice?
The CP504 notice is the 'Urgent Notice - Balance Due and Intent to Levy.' The IRS sends this notice when a taxpayer has ignored earlier demand letters like the CP14. It states that the IRS will seize your state tax refund and apply it to your tax liability.
Additionally, the notice warns that if you do not pay or establish a payment plan immediately, the IRS will proceed with levying your bank accounts, wages, retirement funds, or real estate next, making it a critical warning.
Halt IRS Collections Immediately
To halt collections after receiving a CP504, you must contact the IRS immediately or log into your online account to establish a payment agreement. Establishing an installment agreement or CNC status will automatically stop collection actions.
If you do not agree with the tax balance, you can request a Collection Due Process (CDP) hearing. However, a CP504 notice does not grant full CDP rights for all assets; those rights are granted by subsequent notices like the LT11.
Steps to Resolve a CP504 Notice
First, pay your balance in full or establish an installment agreement online. If you are facing severe financial hardship, call the IRS and request Currently Not Collectible status to suspend collection activities.
Second, ensure that all of your prior tax returns are filed. The IRS will not approve payment agreements if you have outstanding, unfiled returns, so filing outstanding returns is an essential first step.
Frequently Asked Questions
For your state tax refund, yes. However, for other assets like bank accounts or wages, the IRS must send an additional notice (like the LT11 or Letter 1058) before they can legally execute the seizure.
You must contact the IRS to set up a payment plan or request Currently Not Collectible status. Ignoring the notice will lead to immediate seizures of your bank accounts or wages.
Yes, you can request a Collection Due Process (CDP) hearing within 30 days of the notice to appeal the collection action and discuss alternative resolution paths.
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