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)
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.
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 debt 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.