Do you owe back taxes to the IRS? Are you seriously delinquent in repaying your balance? If so, you've probably already received quite a few written IRS tax notices from the agency. Dealing with an outstanding tax bill is never easy, but if you ignore or neglect your balance, the IRS can use forcible seizure to possess your assets and use them to clear up your account. By the time you receive a CP504 notice, you may not have much time to straighten your affairs. For this reason, you should take the CP504 notice seriously. 

What is a CP504 Notice?

The IRS only sends a CP504 notice after agents have already issued a CP501, CP502, and CP503 notice, respectively. A CP504 notice serves to notify you of your total balance due, but it also serves as a warning that the agency will pursue a more aggressive IRS collection action if your balance remains unpaid. Since the IRS only sends a CP504 notice when a taxpayer has not attempted to make any restitution in the past, it is usually the final notice before the agency begins process of issuing a tax levy or tax lien.

Can You Ignore a CP504 Notice?

You can ignore a CP504 notice, but doing so is terrible for your financial situation. If the situation goes unresolved after receipt of the CP504, the next thing the IRS will do is place a levy on your state refund. This means that if you are entitled to receive a state tax refund next year, the IRS will automatically seize it to help cover your outstanding balance.

If the refund amount is not enough to repay your balance, the agency may also impose a federal tax lien. This action gives the IRS the right to seize any profits you realize from the sale of a major asset such as your home or land.

How to Handle a CP504 Notice

Once you receive a CP504 notice, you should contact the IRS right away using the phone number on the notice. If you cannot pay the full amount of your balance due, don't hesitate to call the IRS and set up a tax installment plan. The payment plan arrangement is free and allows you to choose how much of your balance to submit each month.

What if you disagree with the IRS's total or you feel that the agency is in error regarding your case? You can contact the IRS to initiate the appeal process by phone. Filing an appeal does not automatically clear up your account, but it does notify the IRS that you are taking steps to address your tax bill.

If you receive a CP504 notice from the IRS, you should begin working on your account instantly. Contact the agency and inform the representative of how you intend to resolve your matter. Don't forget to speak with a qualified tax professional if you need help navigating your way through the appeal or payment process.