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What is the IRS Notice CP 504?

Jo Willets, EA Director of Tax Resources, Jackson Hewitt Published On March 19, 2020

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If the IRS can’t get your attention through other notices requesting payment, they may start sending more serious ones that tell you how else they intend to get the money they’re owed. A CP504 Notice opens the way for the IRS to potentially issue a levy against your state tax refund, or even seize your property to cover your payment.

How many notices will the IRS send before a levy?

If you have unpaid taxes, the IRS will start by sending you one or more notices requesting payment. If you have unpaid taxes, the IRS will start by sending you one or more notices requesting payment, including the IRS Notice CP521. If you haven’t paid the balance due after a five or more notices , the IRS will send you Notice CP504, which notifies you that they plan to seize your state tax return and apply it to what you owe. This is the last notice you will receive before the IRS sends the notice they are levying your assets. This notice is urgent and you should take action immediately. Read this notice carefully—it will explain everything you need to know, including:

  • The amount you owe

  • Your payment’s due date

  • Payment options

  • The consequences of not paying your balance

Before you take action, just make sure it’s a real IRS notice. The CP504 code should appear in the top or bottom right-hand corner as well as an IRS phone number. If you question whether the letter is authentic, you can try that phone number or call this one: 800-829-1040

What should I do after receiving a CP504?

If you can pay the amount due, pay it online as soon as possible via one of the electronic methods on the IRS’ Payments page, or using the envelope provided with the notice. You usually have 21 days to pay, but check on the notice to find the exact due date. Electronic payments via the IRS website are encouraged because they are faster and more reliable. You can use a bank account, debit card, or credit card.

If you can’t pay the full balance, call the number at the top of the notice as soon as possible to see if you qualify for an installment plan. The IRS is willing to work with you, but you need to work something out before your due date to avoid your account being levied.

What happens if I don’t pay my debt?

The top of Notice CP504 reads: “Intent to seize your property or rights to property. Amount due immediately: $XX,XXX.” With this notice, the IRS is informing you of their intent to issue a levy against your state income tax refund—this means they will take any refund you would get back from the state and apply it to your balance due. This is the last letter you will get before IRS sends the notice of levy.

The fine print on Notice CP504 also warns you of what will happen if your state tax refund is seized and doesn’t cover what you owe: The IRS may send you a notice giving you the right to a hearing before the IRS Court of Appeals. If you don’t respond to that notice, the IRS has the right to seize or take possession of your property or rights to property, including:

  • Wages (or pay), real estate commissions, and other income

  • Bank accounts (including savings)

  • Business assets

  • Personal assets (including your car and home)

  • Social Security benefits

The IRS can also file a Notice of Federal Tax Lien on your property. If a lien is in place, it can be hard to sell or borrow against your property. The lien also shows up on your credit report, which will hurt your credit rating, and your creditors would get a notice that the IRS is now first in line to seize your property.

On top of that, penalties and interest on your unpaid amount will continue to accrue until the balance is paid. If this is scaring you, it’s meant to. Try to avoid getting to the point where the IRS sends this notice—it’s bad news and all you really have to do to avoid it is pay your tax debt or make your agreed upon installment payments. If you made a plan to pay your debt back and you can no longer afford the payments agreed upon, reach out to the IRS to revise your plan. Read more about this here.

What if I think my balance due is incorrect?

If you have already paid the amount due listed on the Notice CP504 you received, have already set up an installment plan, or think the amount is not correct, call the number at the top of the notice to speak to an IRS customer service representative. If you still disagree after contacting the IRS, read on.

What if I need help with my tax situation?

A tax professional can deal with the IRS for you and take immediate action to help you address your tax debt. Owing taxes can be stressful, especially if there is a lien on your assets or property. Contact Jackson Hewitt Tax Debt Resolution for a free consultation with our Tax Debt Resolution Specialists to discuss your options and find out how we can help.

About the Author

Jo Willetts, Director of Tax Resources at Jackson Hewitt, has more than 25 years of experience in the tax industry. As an Enrolled Agent, Jo has attained the highest level of certification for a tax professional. She began her career at Jackson Hewitt as a Tax Pro, working her way up to General Manager of a franchise store. In her current role, Jo provides expert knowledge company-wide to ensure that tax information distributed through all Jackson Hewitt channels is current and accurate.

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