The CP504 is a Notice of Intent to Levy, issued under Internal Revenue Code section 6331(d). The IRS calls it a final reminder about an unpaid balance. It is one of the most serious notices in the balance-due sequence, yet it is often misunderstood. It is not the formal levy notice that carries Collection Due Process hearing rights. That one comes later. But it is the point where you should stop waiting.
What the notice says
The CP504 shows the amount you owe and your payment options. The IRS warns that it may levy your state income tax refund and that it may also file a Notice of Federal Tax Lien if it has not already. A federal tax lien is a public notice to creditors that can make it harder to sell or borrow against property and may affect your credit. The notice also mentions that under federal law the State Department generally cannot issue or renew a passport for a taxpayer with seriously delinquent tax debt.
The IRS lists the kinds of property it may take: wages and other income, real estate commissions, bank accounts, business assets, and personal assets, including a car and home, as well as Social Security benefits. Those are examples of what levy can reach, not a prediction that each will be taken.
What a CP504 is not
The IRS's Collection Due Process page makes a point many people miss: a CP504 does not give CDP rights, and the IRS says it cannot levy based on a CP504 alone. The formal levy notice with hearing rights, such as CP90 or CP297 or LT11 and Letter 1058, is the next step. The exception the IRS names is a state tax refund, which it may levy after a CP504. If a balance remains after that levy, you may receive the right-to-a-hearing notice if you have not already.
Do not read that as a reason to wait. The CP504 is the signal to resolve the balance while you have the most options.
Your options
- Pay in full now. Online or by mail with the bottom portion of the notice.
- Pay what you can and arrange the rest. The IRS says the online payment agreement is the fastest way to get an installment agreement approved. If you cannot use it, call the toll-free number on the notice. See installment agreements.
- Disagree. Call right away if you believe the balance is wrong, with supporting records.
- Request a Collection Appeals Program hearing. Follow the instructions on your notice, before collection takes place. Under Publication 1660, CAP is quick and broad, but you cannot take a CAP decision to court and you cannot challenge the amount of tax in CAP.
- Ask about hardship or a settlement. See currently not collectible status and offer in compromise.
If you already paid or have a payment plan, call the toll-free number anyway to confirm your account reflects it.
Interest and penalties
Interest keeps running on an unpaid balance, and penalties continue to accrue. The IRS states a failure-to-pay penalty increases from one-half of one percent per month to one percent per month if tax remains unpaid 10 days after a notice of intent to levy. See failure-to-pay penalty.
What happens if you do nothing
A lien may be filed and a state refund levied. Then a final notice of intent to levy follows, with a 30-day window to request a CDP hearing, after which the IRS may levy wages, accounts and other property. See IRS liens and levies and wage garnishment and bank levies.
Common mistakes
- Treating the notice as "just another reminder."
- Relying on the absence of CDP rights to delay.
- Making a payment that does not cover the balance and expecting that to stop collection.
When to involve a CPA
Call a CPA at this stage if you owe a significant amount, if more than one year is involved, if you are self-employed, or if you may need a payment plan, hardship status or an offer. A CPA can propose terms and, with a signed Form 2848, handle the IRS contact.
How we can help
We can evaluate the balance, request penalty relief where available, and negotiate a payment arrangement before a levy notice arrives. See our IRS representation services or contact us.
Frequently asked questions
Can the IRS take my paycheck after a CP504?
The IRS says it cannot levy based on a CP504 alone, though it warns that a state tax refund may be levied. For wages and bank accounts, a final notice with hearing rights comes first. Do not wait for that notice to act.
Is the CP504 the same as a final notice?
No. It is described as a final reminder, but the notice that gives you CDP rights is a separate one, such as CP90, CP297, LT11 or Letter 1058.
Can I appeal a CP504?
You can request a CAP hearing before collection action, following your notice's instructions.
Official sources
- IRS: Understanding your CP504 notice
- IRS: Collection due process (CDP) FAQs
- IRS: Publication 1660, Collection Appeal Rights
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.