Receiving a notice from the Internal Revenue Service (IRS) can be unsettling, especially when it involves terms like "intent to levy" or "final notice." One of the most urgent letters the IRS sends is the CP504 notice, which signals the agency’s intention to begin collection action on an unpaid tax debt. This notice warns that the IRS may seize your state income tax refund to recover the balance owed. It also serves as a critical point in the enforcement timeline that should not be ignored.
The CP504 is part of a series of escalating letters the IRS sends when tax bills go unpaid. While it does not yet authorize a levy on your wages or bank account, it marks the transition to more serious enforcement. If no action is taken, you could face additional penalties, a federal tax lien, or even passport restrictions if your seriously delinquent tax debt meets certain thresholds. The notice also outlines your outstanding balance, interest charges, and available payment arrangements.
Understanding your rights and responsibilities under this notice is key to avoiding costly mistakes. This article explains what the CP504 is, how it fits into the IRS collection process, and what options you have to respond. We’ll also cover steps to verify the notice, choose the right repayment strategy, or appeal if necessary. Acting quickly improves your chances of protecting your personal property and resolving your IRS tax debt before further action occurs.
The CP504 notice, which is also called the Notice of Intent to Levy, is a formal warning from the IRS that you owe taxes and haven't paid them yet. It is authorized under Internal Revenue Code Section 6331(d) and represents a critical stage in the IRS collection process. The CP504 informs you that the IRS intends to seize your state income tax refund and may begin additional collection efforts if no action is taken. It also highlights that failure to respond could result in further consequences.
This notice includes key details, such as the total unpaid balance, applicable interest charges, and additional penalties added to your account. It outlines a specific payment deadline and provides IRS contact information so you can resolve the matter. You’ll also find instructions for making payment arrangements, including how to request an installment agreement. However, while the CP504 is serious, it does not give the IRS authority to seize wages or bank accounts.
What makes the CP504 different from earlier notices like CP14 or CP501 is its legal implication and intent to levy. Prior letters may remind you of your outstanding balance, but the CP504 clearly warns of immediate action—starting with your state refund. If ignored, the IRS can proceed to send LT11 or Letter 1058, both of which grant broader enforcement authority. These later notices also trigger your right to request a Collection Due Process hearing.
You need to know what the CP504 is to keep your money safe. It is a turning point between routine reminders and forced levy action, and it should be taken seriously. Quickly reading the notice and responding with payment or appeal options can help keep your finances from getting worse in the long run.
The CP504 notice is an integral part of the IRS's collection process, but it's not the first letter you get when you owe taxes. The first step is usually the CP14 notice, the first tax bill. If you don't respond or pay, the IRS sends CP501 and CP503 reminders. Each notice gets increasingly urgent, making it easier to collect money.
If the balance remains unpaid, the IRS sends the CP504 notice, called the Notice of Intent to Levy. This marks the IRS’s intent to proceed with enforcement, starting with seizing your state tax refund. It is the first notice to mention the word “levy” and carries legal weight under Internal Revenue Code Section 6331(d). The CP504 does not, however, give the IRS the power to take money from your paycheck, freeze your bank accounts, or take other personal property.
Before going all out on enforcement, the IRS usually sends these notices in this order:
These final letters allow you to appeal or propose payment arrangements through the IRS Independent Office of Appeals. The CP504 does not provide this right but signals that such enforcement is imminent. Taking action at this stage allows you to avoid more severe consequences, including levy action and legal claims against your property. Responding promptly helps preserve your appeal options and protects your financial stability.
After sending the CP504 notice, the Internal Revenue Service (IRS) gains limited authority to begin levy action. At this stage, the IRS can seize your state tax refund to help satisfy your unpaid tax debt. This procedure includes the Alaska Permanent Fund Dividend if you live in Alaska. A formal step in the IRS collection process, the CP504 serves as a final warning before the IRS initiates more aggressive collection efforts.
Although the CP504 is serious, it does not authorize the IRS to levy your wages, bank accounts, or personal property. These broader actions require a different letter, typically Letter 1058 or LT11, which serves as the Final Notice of Intent to Levy. That final notice also grants your right to a Collection Due Process hearing, which is not provided with the CP504. The IRS must issue that separate letter before it can seize other types of assets or income.
If you ignore the CP504 and the IRS escalates the case, the agency can pursue more expansive forms of enforcement. This may include garnishing wages, freezing bank accounts, or seizing Social Security benefits. Additionally, the IRS may target your business assets, other income, or valuable personal property. The CP504 does not directly trigger these actions, but the notice provides your last chance to resolve the issue before enforcement begins. Understanding what is at risk and how enforcement escalates is critical to protecting financial stability. A timely response helps you avoid hardship and may allow you to resolve the tax liability through payment arrangements or appeals.
What Happens If You Ignore the CP504
Ignoring the IRS CP504 notice can trigger serious consequences beyond seizing your state income tax refund. While this notice allows the Internal Revenue Service to collect your refund, continued noncompliance may lead to broader levy action. If you do not respond, the IRS will typically escalate by sending Letter 1058 or LT11, granting the agency complete authority to seize wages, bank accounts, and other personal property. These notices also include your right to a Collection Due Process hearing, which is your final opportunity to appeal before enforced collection begins.
One of the first consequences you may face is filing a Notice of Federal Tax Lien. This public document establishes the IRS’s legal claim against your property and can impact your credit, ability to sell assets, or secure financing. Continued failure to resolve the unpaid balance may also result in the IRS garnishing your wages or freezing your financial accounts. In extreme cases, the IRS can seize business assets, vehicles, or even real estate to cover the tax debt.
Another serious consequence involves your United States passport. Under the FAST Act, taxpayers with seriously delinquent tax debt—generally more than $62,000—may be subject to passport restrictions. The IRS can notify the State Department, which may deny renewal or revoke your current passport. The outcome can affect travel, immigration status, or employment opportunities that require valid identification.
Failing to act on a CP504 notice moves your case deeper into the IRS collection process. You risk losing appeal rights, limiting payment arrangement options, and facing long-term financial damage by not responding. The sooner you address the issue—by paying, requesting a hearing, or consulting a tax professional—the more control you’ll retain over the outcome.
Before taking action, confirm that the CP504 notice is an official communication from the Internal Revenue Service (IRS). Check for accurate IRS branding, a valid return address, and official language. You can verify the notice by calling the IRS using the toll-free number on their website. If you're unsure about the authenticity, consult a trusted tax professional before making any payments or disclosures.
Once verified, read the notice thoroughly. It includes the unpaid balance, a breakdown of interest charges, and a payment due date. The CP504 also warns that the IRS will seize your state tax refund and may file a federal tax lien if no payment is made. Reviewing this information carefully helps you understand the seriousness of the situation and prepares you to choose the appropriate response.
If you agree with the IRS’s calculation of your tax liability, you can pay the amount in whole or arrange for payment plans. Payment can be made through Direct Pay, EFTPS, or by mailing a check with the voucher provided. Partial payments may help reduce penalties and interest, even if you can’t pay the full balance immediately.
If you disagree with the balance, gather documentation such as prior payments, IRS transcripts, or amended returns. You can contact the IRS to dispute the amount or file Form 843 to request an abatement of penalties or interest. Depending on the case, you may need to appeal to the IRS Independent Office of Appeals or seek assistance from the tax court.
The IRS offers several payment arrangements for taxpayers unable to pay in full:
An Offer in Compromise (OIC) might be a viable alternative for individuals who cannot pay the entire amount. You can use the IRS Offer in Compromise Pre-Qualifier Tool to assess eligibility. To apply, submit Form 433-A (OIC) or Form 433-B (OIC), along with Form 656, and a $205 application fee unless you qualify for a low-income exemption.
If you believe the IRS is taking inappropriate collection action, you can request a review under the Collection Appeals Program (CAP). This allows you to challenge lien filings or proposed levy actions before they occur. To initiate a CAP appeal, complete Form 9423 and send it to the address listed on your notice.
Although the CP504 does not grant access to a Collection Due Process hearing, if you receive future notices like Letter 1058 or LT11, you can request a CDP hearing by filing Form 12153 within 30 days. This allows you to dispute the collection, propose an installment agreement, or present other relief options.
The CP504 notice does not grant you the right to a Collection Due Process (CDP) hearing. That right becomes available only when the Internal Revenue Service (IRS) issues a Final Notice of Intent to Levy, such as Letter 1058 or LT11. These letters inform you of your legal right to dispute the levy action and request an independent review. In contrast, the Collection Appeals Program (CAP) offers quicker resolutions but does not pause enforcement or allow you to challenge the tax liability directly.
The IRS must offer a CDP hearing before seizing bank accounts, personal property, or other financial assets—unless it has already offered one for the same tax period. When you receive LT11 or Letter 1058, you have 30 days to respond by filing Form 12153. Failing to act within that window results in losing your right to request a hearing. Knowing this distinction is critical to protecting your assets and appeal rights.
To initiate a CDP hearing, complete and submit Form 12153 to the address on your notice. During the hearing, you may propose a payment arrangement, such as an installment agreement, or present alternative relief options, such as an offer in compromise. The IRS Independent Office of Appeals conducts the hearing separately from the collections unit. Responding within the allowed timeframe ensures your case is reviewed before enforced collection begins, giving you a final chance to resolve your IRS tax debt voluntarily.
Getting a Levy Released
If the IRS has issued a levy notice, there are specific conditions under which the levy must be released. According to the Internal Revenue Code, the IRS must release a levy if the tax debt has been fully paid or the collection statute has expired. The IRS must also release the levy if it causes an economic hardship, meaning you cannot meet basic living expenses. In some cases, entering into an installment agreement that does not permit continued levy action may also qualify you for a release.
Contact the IRS using the phone number on your notice to request a levy release. You may need to explain your financial situation and provide proof of hardship or eligibility. The IRS often requires Form 433-A or Form 433-F, or Collection Information Statements, to evaluate your current financial status. If your case is urgent, the Taxpayer Advocate Service can help by submitting Form 911.
If the IRS denies your release request, you can appeal using Form 9423, the Collection Appeals Request. This initiates a review through the Collection Appeals Program (CAP), allowing you to challenge the IRS’s decision. Acting quickly helps protect your bank account, business assets, or personal property from seizure. Taking prompt action may stop enforced collection and help you regain financial stability.
If paying your IRS tax debt would prevent you from meeting basic living expenses, you may qualify for relief based on economic hardship. In such cases, the Internal Revenue Service (IRS) may grant Currently Not Collectible (CNC) status, temporarily halting enforced collection action. While this status does not eliminate the debt, it prevents the IRS from seizing your bank account, garnishing wages, or issuing new levy notices during hardship.
To request CNC status, you must provide a complete financial overview. This typically includes submitting Form 433-A, Form 433-F, or Collection Information Statements. These forms require detailed information about your income, necessary living expenses, and assets. You may also be required to submit proof, such as pay stubs, utility bills, and bank statements, to verify your collectible status.
It may approve your CNC request if the IRS agrees that collection would cause undue hardship. Once approved, the IRS will suspend collection efforts but continue to assess interest charges and penalties on the unpaid balance. You must continue filing all required tax returns on time. CNC status is not permanent. The IRS may review your financial condition periodically to determine whether your circumstances have improved. If your income increases or your expenses decrease, the IRS may lift the CNC designation and resume enforcement. Staying in contact with the IRS—or working with a qualified tax professional—can help ensure your relief remains in place as long as needed.
If you have received a CP504 notice and are unsure how to proceed, several reliable sources of assistance exist. The Internal Revenue Service (IRS) and independent organizations offer tools, support, and representation to help you manage your tax debt. Whether you need help with payment arrangements, appealing a decision, or avoiding levy action, acting quickly increases your chances of a favorable resolution.
Here are several options available for you:
Sometimes, working with a qualified tax professional can provide personalized guidance and help you avoid costly mistakes. Seeking support early enables you to maintain control, reduce stress, and protect your financial future before the situation worsens.
The CP504 IRS notice informs you that the Internal Revenue Service intends to seize assets, such as your state income tax refund, due to an unresolved tax debt. Unlike previous letters such as CP14 or CP503, CP504 carries legal weight under the tax code. It is more than just a payment reminder—it is a levy and notice combination that warns of imminent enforcement. This is one notice you should never ignore.
The CP504 allows the IRS to seize your state tax refund, but not yet your assets, other property, or bank accounts. These actions require a Final Notice of Intent to Levy and a notice of your right to an appeal. After that, the IRS may pursue enforcement against other assets, including other income and bank deposits. Ignoring the CP504 increases the likelihood of a broader seizure if the account reflects an unpaid balance.
After the CP504, the IRS may send Letter 1058 or LT11, which includes your right to a hearing and a notice of your right to a Collection Due Process hearing. This right allows you to challenge the collection action or propose alternatives. You may request an equivalent hearing if you miss the 30-day deadline, although it won’t delay enforcement. A timely response is critical to preserve legal options.
The IRS cannot issue a disqualified employment tax levy based solely on the CP504. However, if you ignore notices, the IRS may escalate to more aggressive collection tools, including levies on payroll or contractor payments. These levies are used in cases of repeated noncompliance. Avoiding them requires proactive steps such as entering a payment plan, disputing the debt, or working with a tax attorney to explore resolution strategies.
The CP504 doesn't immediately stop you from getting a US passport or starting a public lien filing. If the account shows a seriously delinquent tax debt, though, the IRS may respond by putting up a Notice of Federal Tax Lien for everyone to see or by telling the State Department. These things can stop you from traveling and hurt your credit. Taking action early helps avoid escalated consequences and preserves your standing.
If you qualify, you can consult a tax attorney or professional or seek a free consultation through a Low Income Taxpayer Clinic (LITC). These services help you respond to IRS notices, file appeals, and represent you in tax court if necessary. Acting alone can be risky when your assets are on the line. Getting expert advice ensures that your rights and finances are adequately protected throughout the collection process.
You can still request a Collection Due Process hearing using Form 12153 even if you missed the deadline. You can still make your case during this process, but collection activities will continue. It can help you argue about the amount owed or suggest other options. Working with a tax professional or attorney improves your chances of success and helps protect other assets at risk of seizure.
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