June 25, 2017

If you owe back taxes to the Internal Revenue Service, you may receive a CP-504 notice in the mail. The CP-504 notice essentially informs you of the agency’s intention to issue a levy against your state income tax refund because you have an outstanding balance on one of your tax accounts. If you are unable to pay the amount due immediately, the IRS will levy or seize your state tax refund, and use it to pay the amount owed.

The CP-504 notice also informs that you that the IRS will start to search for other assets on which they can issue a levy, and that they may opt to file a Federal Tax Lien against you if they have not yet done so. Moreover, the CP-504 notice explains the possible revocation or denial of a U.S. passport.

In order to avoid such actions from being taken against you, you must pay the due amount immediately. The CP-504 notice outlines your amount due, due date, and different payment options, so it is important that you read it fully. You must also make the full payment before the due date.

If you have the means to pay the bill in full, mail your payment in the envelope sent by the IRS. Be sure to include the bottom part of the notice, as this ensures your payment is correctly credited and that additional collection activities are terminated.

If you are unable to pay the entire amount before the due date, call the phone number provided at the top of the correspondence to discuss an installment agreement or other payment options that enable you to make regular payments until your tax issue is resolved.

If you do not pay or even contact the IRS, the agency may proceed to levy or seize any state tax refund you are entitled to. If you still have an outstanding balance with the IRS after your state tax refund has been seized or levied, you may be issued a notice that gives you the right to a hearing before the IRS Office of Appeals. The IRS may then decide to levy or seize your other property or your rights to property. This includes wages and other forms of income, personal assets such as your home and car, business assets, bank accounts, and Social Security benefits.

If, however, you have reason to believe that the CP-504 notice was sent to you in error or if you disagree with the notice, call the IRS as soon as possible to dispute the notice.

It is crucial that you take a CP-504 notice seriously, as the consequences of ignoring this can negatively impact your personal finances. If a Federal Tax Lien against you is in place, you may have difficulty selling your property or borrowing against it. The tax lien will also be reflected in your credit report, thus damaging your credit rating. The IRS will have precedence to seize your property, and your creditors will be publicly notified of such.

Though IRS notices such as the CP-504 can seem intimidating in nature, keep in mind that the threatening tone used is meant to compel immediate action on your part. If you have questions or are unsure as to the next steps to take, consult with a specialized tax attorney who can contact the IRS on your behalf. A qualified tax attorney can help you work towards a payment option that will provide the tax relief you need.

Categories: IRS