What is the CP 504 Notice?

By Top Tax Staff | Aug 16, 2017 9:00:00 AM | IRS Collections

    
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When you fail to pay your federal tax debt in a timely manner, you may find yourself subject to IRS collection activities. Before the IRS can collect funds from you, it must notify you of its intentions through a written CP 504 notice. Discover what this notification is and what actions are expected of you if or when you receive a CP 504 notice in the mail.

What is the CP 504 Notice?

The CP 504 notice is written notification of the IRS' intent to levy any assets that you hold. This notice must be provided to you in writing. It also may delivered by regular or certified U.S. mail. 

Specifically, the letter that you receive will inform you of the IRS' intentions to levy your state tax refund. It also will stipulate that the IRS has launched a search into what assets if any you hold and what ones can be levied to recoup the money that you owe the government.

Some of the assets that can be levied to satisfy your tax debt include:

  • wages or salaries
  • real estate commissions
  • checking and savings bank accounts
  • business assets
  • personal assets like a secondary home or car
  • Social Security benefits
Depending on what assets are found to be in your possession, the IRS may have the right to put a levy on them until your debt is paid in full.

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How to Respond to a CP 504 Notice

If you receive a CP 504 notice in the mail, it is crucial that you do not ignore it. This notice is chance to get into contact with the IRS to discuss ways to settle the debt before your assets are levied. 

You should call the telephone number on your notice to speak to an IRS agent. The agent will be able to discuss what repayment or debt settlement options are available to you. If you purposely avoid taking this measure, the IRS may proceed with levying your assets, which can result in you losing income upon which you rely to support you and your household.

Repayment and Tax Debt Settlement Options

When you call the telephone number listed on your CP 504 notification, you should be informed about what options are available to you to settle or repay what you owe to the IRS. Some of the choices commonly available to most taxpayers include:

The choices available to you will depend on how much money you have in your bank accounts right now and what assets can be liquidated to put toward your debt.
 
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CP 504 Disputes 

If you do not agree with the CP 504 notice, you have the right as a taxpayer to dispute it. Before you challenge the notification, however, you should discover how to do so in a productive manner and what legal resources are available to you.

First, you are encouraged to retain the services of a tax professional who is trained and experienced in the IRS tax codes. Your tax professional can review your returns and the CP 504 notice to ensure the legitimacy of your dispute.

You may then file an appeal and follow through with the process to have the IRS review your taxes. The entire appeals process may last for up to a year. During that time, the IRS may still reserve the right to levy your assets.

The IRS notifies taxpayers of its intent to levy assets with the CP 504 notification. You can act in your best interests by knowing what this notice is and how best to respond to it.

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