CP504 Notice: What It Means and What to Do Now

A CP504 usually arrives after earlier balance due notices went unpaid. It warns that the IRS intends to levy, which means legally seize, your property or rights to property. It is meant to get your attention, and it should.

Here is the good news. For most people, the CP504 is not the notice that lets the IRS empty a bank account or garnish wages the next day. There is usually one more legally required step. Here is the bad news. The CP504 starts a clock, and the IRS can take certain money right away. Use the time you have now.

What the CP504 is

Internal Revenue Code section 6331(d) says the IRS can levy only after it notifies you in writing of its intent to levy, at least 30 days before the levy. The Internal Revenue Manual (IRM 5.11.1) identifies the CP504 as that section 6331(d) notice of intent to levy.

The CP504 also tells you that a Notice of Federal Tax Lien may be filed. The IRM (5.19.4) lists the CP504 as a valid written warning before the IRS files a lien notice. See what a lien notice filing means.

How it differs from the final notice

There are two different notices people confuse:

Notice	Law behind it	What it does
CP504, Notice of Intent to Levy	IRC 6331(d)	Satisfies the 30-day written notice before a levy. It does not give you Collection Due Process (CDP) hearing rights.
Final notice of intent to levy and your right to a hearing (often Letter LT11, Letter 1058, CP90 or CP297)	IRC 6330	Gives you 30 days to request a CDP hearing with the IRS Independent Office of Appeals before most levies. A timely request generally suspends the levy while the hearing is pending.

Section 6330(a) generally prohibits a levy unless the IRS has notified you of your right to a hearing at least 30 days before the levy. That is the notice that really matters for your bank account and paycheck. If you have a final notice in hand, read what to do with a final notice of intent to levy first. That deadline comes first.

What the IRS can take after a CP504

Section 6330(f) lists situations where the IRS does not have to offer the hearing before it levies. You get a hearing opportunity after the levy instead. The ones most relevant after a CP504:

• Your state tax refund. Section 6330(f)(2) covers a levy served on a state to collect a federal tax from a state tax refund. The IRM (5.11.1) confirms a state refund can be levied even though you have not yet been sent a notice of your right to a hearing. You are sent a post-levy notice (CP92) with hearing rights afterward.
• Payments to federal contractors. If you or your business is a federal contractor, section 6330(f)(4) allows a federal contractor levy without a pre-levy hearing. The IRM (5.19.9) says the CP504 satisfies the 30-day notice for these levies.
• Certain repeat employment tax cases. Section 6330(f)(3) and (h)(1) cover a "disqualified employment tax levy" for a business that requested a CDP hearing on employment taxes in the prior two years.
• Jeopardy cases. If the IRS finds collection is in jeopardy, the normal notice rules do not apply.

For everyone else, wages, bank accounts and most other property generally require the separate CDP notice first. But the CP504 is often the last notice before that one, and the gap can be short.

The penalty rate goes up

There is a cost to waiting. Under section 6651(d), the failure-to-pay penalty rate doubles from 0.5% to 1% per month, beginning 10 days after the IRS gives notice under section 6331(d). The CP504 is that notice. Interest keeps running too.

If your state refund was already taken

When the IRS levies a state tax refund through its State Income Tax Levy Program, the IRM (5.19.9.3.4) says it sends a post-levy notice, CP92, by certified mail if this is the first levy for that tax and period. The CP92 comes with Form 12153, the request for a Collection Due Process hearing, and Publication 1660, which explains collection appeal rights.

Do not throw the CP92 away with the rest of the mail. It carries its own hearing deadline, and a hearing is a chance to propose a payment plan or other alternative before levies on wages or bank accounts start. If you already received a CDP notice for the same tax period, the IRM says a new one generally will not be issued for that period, so check what you already have.

What to do right now

1. Check the notice against your records. Confirm the tax year, the amount, and that payments you made were credited. Mistakes happen, especially with payments sent to the wrong year.
2. Look for any other IRS letters. If you also have an LT11, Letter 1058, CP90 or CP297, that notice has a 30-day CDP deadline. Deal with it first. See IRS deadlines you cannot miss.
3. Pay in full if you can. That ends the problem and stops the penalty growth.
4. If you cannot pay in full, ask for a payment plan now. Section 6331(k)(2) bars a levy while an installment agreement request is pending, for 30 days after a rejection (longer if you appeal), and while the agreement is in effect. That protection starts when you ask, so asking early matters.
5. Consider other options if a plan does not fit. If paying anything would mean you cannot cover basic living expenses, ask about a temporary delay in collection. An offer in compromise is another option; section 6331(k)(1) bars a levy while an offer is pending.
6. File any missing returns. Most payment arrangements require you to be current on filing.
7. Expect your state refund to be at risk. If you are due a state refund, plan as if it may be taken.

What not to do

• Do not wait for the "real" final notice. The CP504 already raised your penalty rate, and the next letter gives you only 30 days.
• Do not move money around to hide it. That can create bigger problems than the tax bill.
• Do not ignore a CP504 because you think the amount is wrong. Call or write to dispute it, and keep a record of the date and who you spoke with.
• Do not pay anyone who calls demanding gift cards or wire transfers. If you are unsure whether a notice or call is real, read how to tell if an IRS contact is a scam.

Getting help

A CP504 is the right time to get organized, not the time to panic. If the balance is large, you run a business, you have unfiled years, or you already have a final notice, talk to a tax attorney before the next deadline arrives. You can reach our office through GetIRSHelp.com or at (813) 229-7100. If money has already been taken, start with the first 24 hours of an IRS emergency.