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The IRS CP504 notice is also known as a Final Notice of Tax Balance Due and Intent to Levy. The IRS sends a CP504 notice when you still have an unpaid tax balance and haven’t responded to earlier tax balance due notices (CP14, CP501, CP503).
Due to the backlog of past-due tax debts caused by the "pandemic," the IRS has been relying on their computer system (Automated Collection System - ACS) to collect money and close files.
The purpose of the CP504 notice is to let you know that the IRS intends to take aggressive measures to collect your back taxes. A CP504 letter only needs to be sent out once and it can be sent to an old address. These collection actions include garnishing your wages, levying your bank account, or placing a lien on your home or other assets.
What Is a CP504 Notice and Why Did I Receive It?
An IRS CP504 notice informs you that the IRS plans to levy (seize) your assets (wages, bank account, property) or place a tax lien on your property to settle an unpaid tax debt. The IRS will take enforcement action when you ignore them. The CP504 notice gives them the authorization to act.
What Should I Do When I Receive a CP504 Notice?
When you receive a CP504 notice, you need to pay the unpaid taxes or respond to the IRS right away. Finding your money isn't difficult to do. Your W-2, 1099, interest report from your bank will do the trick for the IRS.
You could contact the IRS and the Agency will dictate to you what the payment plan will be. The IRS wants your tax debt paid off before the Statute of Limitations runs out.
How Much Time Do I Have to Respond to My CP504 Notice or Pay My Tax Balance?
To protect your rights and place you in an advantageous position, an immediate response is best. The CP504 notice will include a payment due date, after which the IRS reserves the right to levy your accounts or garnish your wages. Typically, the IRS gives you a maximum of 30 days to
respond to a CP504 notice.
What If I Don’t Respond to My CP504 Notice or Pay My Tax Balance?
If you don’t respond to your CP504 notice or pay your tax balance due, the IRS will make good on its promise to take aggressive collection actions, up to and including property liens, wage garnishment, and bank account seizure. That’s why it is imperative to respond to the CP504 notice right away.
What If I Receive a CP504 Notice and Can’t Pay the Full Amount?
If you can’t pay the amount you owe in your CP504 notice, you should still contact the IRS immediately, as you have many tax relief options to avoid liens and levies without straining your finances. If you have a true financial hardship, the IRS will consider an Offer in Compromise (OIC), in which you can settle your tax debt for less than you owe, sometimes by a significant amount.
You Have 4 Choices.
1. Enter into an IRS Installment Agreement. Before you do, consult with an IRS problem solver first.
2. Be declared Currently not Collectible. Being placed into IRS hardship will stop IRS enforcement actions.
3. Settle with IRS. A successful Offer in Compromise will stop enforcement and settle the tax debt for a lot less.
4. Do nothing and have the IRS take your paycheck and bank accounts.
The above choices are the only options you have after the CP504 letter is sent to you.