IRS Notice CP504: What It Means and What to Do

Why did I get a CP504?

Common reasons include:

• Earlier balance-due notices (CP14, CP501, CP503) were not paid or answered
• A payment plan was never set up, or it lapsed
• Payments were misapplied or have not posted
• The balance grew with penalties and interest after earlier notices

What should I do?

1. Read the notice carefully. It explains how much you owe and your payment options.
2. Pay the amount you owe immediately, online or by mail with the bottom part of the notice.
3. If you can't pay in full, pay what you can now and set up a payment plan. The IRS calls the Online Payment Agreement tool the fastest way to get one approved.
4. If you disagree, call the toll-free number on your notice right away.
5. If you want to contest the proposed levy or lien, request an appeal under the Collection Appeals Program before collection action takes place, following your notice's instructions.
6. If you already paid or have an installment agreement, still call to make sure your account shows it.

What documents do I need?

• The CP504 notice and the earlier notices
• Proof of payments or of an existing installment agreement
• Your filed tax return for the year(s) shown
• Recent income and expense information, in case you need to discuss a payment plan or hardship
• Any IRS letter saying collection was suspended because of hardship

What should I avoid?

• Don't wait for the next notice. The IRS's CDP FAQ says it is in your best interest to respond to Notice CP504.
• Don't assume nothing can happen yet. After 30 days, the IRS can levy a state tax refund without first offering a hearing.
• Don't ignore the passport section. Seriously delinquent tax debt can lead to passport denial or revocation.

What if I disagree with a CP504?

Call the toll-free number on your notice right away to discuss it with a representative. Before collection action takes place, you can ask for an appeal under the Collection Appeals Program (CAP) by calling or sending Form 9423. The IRS sample notice says to do this within 30 days from the date of the notice. The CP504 itself is not a Collection Due Process (CDP) notice. The IRS says that for most property other than a state tax refund, it will first send a separate notice that gives you the right to a CDP hearing, unless it already sent one. If you dispute the underlying tax, the IRS lists options such as paying and filing a claim for refund, requesting audit reconsideration, or an Offer in Compromise (Doubt as to Liability).

What happens if I ignore a CP504?

The IRS can file a Notice of Federal Tax Lien, which may affect your credit and your ability to sell or borrow against property. It can levy (seize) any state tax refund you are due. If a balance is left after that, it may send a notice of your right to a hearing with the IRS Independent Office of Appeals and then levy other property, such as wages, bank accounts, business or personal assets, and Social Security benefits. Seriously delinquent tax debt can also lead to passport denial or revocation.

What else should I know about CP504?

Despite the alarming wording, the CP504 is not the final levy notice that comes with Collection Due Process (CDP) rights. It is the 30-day notice required by IRC 6331(d), and on its own it only lets the IRS levy a state income tax refund, which is an exception to the CDP pre-levy notice rule. The IRS internal manual (IRM 5.19.4) says CP504 is "no longer a sufficient notice prior to levy" for other property. Before most other levies, the IRS generally must send an LT11, Letter 1058 or CP90 offering a CDP hearing. That said, the IRS's own CDP FAQ says it is in your best interest to respond to a CP504 rather than wait. The CAP appeal it offers is quicker but can't be taken to court.