IRS Notice Guide
IRS CP504 Notice — What It Means and What To Do
Receiving an IRS CP504 notice can feel overwhelming. This guide explains what the notice means, what the deadlines are, and what options exist for penalty relief.
Response Deadline
The IRS expects a response within 30 days. Acting before this deadline preserves all relief options and prevents escalation to the next collection stage.
What This Notice Means
This is a Notice of Intent to Levy under IRC Section 6331(d). If the IRS does not receive payment or a response within 30 days, it can levy your state tax refund. Further inaction may result in levy of wages, bank accounts, or other property.
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Common Penalties on This Notice
Failure to Pay (FTP)
Interest
Potential Levy Costs
First Time Abate (FTA) May Apply
Penalties on CP504 notices are often eligible for First Time Abate relief under IRM 20.1.1.3.6.1. Taxpayers with a clean 3-year compliance history may qualify for full penalty removal.
FTP penalties may still be abated under First Time Abate even at the CP504 stage. Abatement does not stop the levy process — the underlying tax must also be addressed.
What To Do After Receiving a CP504 Notice
Respond within 30 days to prevent levy of your state tax refund
Pay the full balance immediately if possible
Contact the IRS to set up an installment agreement or request Currently Not Collectible status
File a Collection Appeals Program (CAP) request using Form 9423 if you disagree
Consider consulting a tax professional given the urgency
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Frequently Asked Questions
What can the IRS levy with a CP504?
The CP504 initially authorizes levy of your state tax refund. If the balance remains unresolved, the IRS can proceed to levy wages, bank accounts, Social Security benefits, and other property after issuing additional required notices.
Can I stop a levy after receiving a CP504?
Yes. Paying the balance, entering into an installment agreement, or being placed in Currently Not Collectible status can stop or prevent a levy. You can also file a Collection Appeals Program request.
Is a CP504 the final notice before a levy?
The CP504 authorizes levy of state tax refunds. For levy of wages, bank accounts, and other property, the IRS must send an additional LT11 (Final Notice of Intent to Levy) with Collection Due Process hearing rights.
Have a CP504 notice? Check your penalty eligibility.
What is the Collection Appeals Program (CAP)?
CAP allows you to appeal certain IRS collection actions, including proposed levies, before they occur. File Form 9423 (Collection Appeals Request) by the deadline on the notice.
Will the IRS seize my paycheck immediately?
Not from the CP504 alone. Wage levy requires a subsequent Final Notice (LT11) and expiration of the 30-day hearing period. However, the state tax refund can be seized after the CP504 deadline passes.
Can I still get penalty relief at the CP504 stage?
Yes. Penalty abatement requests can be made at any stage. However, penalty relief alone does not stop the levy — the tax balance itself must be resolved.
What if I cannot afford to pay anything right now?
You may qualify for Currently Not Collectible (CNC) status if paying would create a financial hardship. The IRS may request financial documentation (Form 433-A or 433-F) to evaluate your situation.
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