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If you happen to be awaiting a tax refund from the state and you receive a CP504 notice, there is a chance you may not receive it. The IRS issues the Notice of Intent to Levy CP504 to indicate that they will be levying your state refund (to go against your outstanding tax debt) and may possibly levy other assets as well. This means they might file a tax lien against you, which could result in a loss of wages, real estate, business assets, bank accounts, and more.
Our point: the IRS Notice CP504 letter is serious, not to be ignored, and requires immediate attention. While this notice may seem daunting, do not fret. There are plenty of alternatives and resources you can use to rectify tax debt. Read on to learn more information on CP504.
How Do I Respond to a CP504?
You can respond to the CP504 through mail or by calling the IRS at the number provided on the notice itself. With that being said, being that you are seeking tax debt relief, it is crucial that you first consider hiring a tax professional. These matters are tricky, complex, and difficult to navigate on your own. Especially if you are considering appealing your CP504, or if you want to issue an alternative payment method, then it may be wise to hire someone well-versed in these dealings. Otherwise, you could forfeit funds or your position with the IRS—simply because you lack knowhow.
How Do I Pay for my IRS CP504 Notice?
You can pay your IRS Notice CP504 online, or via check (we recommend you certify mail it). If you happen to agree with the information stated, then the best route forward is to cover the outstanding balance. Unfortunately for many taxpayers, this is not always within their means. Worry not, there are other options.
First, you can consider an IRS debt settlement plan. If approved, this will allow you to pay the outstanding amount incrementally, without risking major penalties or fees. You can also opt for an offer in compromise, which usually goes as follows: you pay an amount less than the total owed but all at once. If you cannot pay the amount owed, there are always other options.
What Is the Deadline for CP504 notice?
The deadline for your notice is going to be on the statement itself. At times, they can differ, seeing as many of these issues are case-dependent. The most common deadline associated with IRS notice CP504 is 21 days. Now, while the IRS is saying you must pay the amount within this 3-week period, it is paramount that you also contact them.
More so, if you happen to be in a situation where you cannot pay the amount owed, then contact must be made immediately. The IRS shows mercy to those who are compliant with their rules. If you do not respond to the IRS within that period, then you run the risk of having your state refund and other assets levied. At the least, you can ask the IRS for an extension and explain your situation.
Is IRS CP504 A Final Notice?
Not necessarily. The IRS can follow up with another notice (LT11 or L1058) that explains they will be levying assets or that they filed a federal tax lien. Still, an IRS notice CP504 needs to be treated as a final notice—being that failure to respond will result in a more serious action taken against you. Once you receive this notice, we recommend you seek IRS tax levy help, as once they take further action, there is little you can do to save your assets. The time to act is before the deadline passes.
By explaining that it is not a final notice, the taxpayer could mistakenly believe they have more time.
Be Meticulous in Your Dealings
Once you receive the notice, it is important that you have a tax return second look. The issue you are facing could actually be fault of your own, in which case you would need to submit an amended tax return. And, of course, the issue could be that the IRS has it wrong. They are not impervious to mistakes, which is why we encourage you to produce your original return, place it side-by-side to the notice (as well as any other relevant information), and decide whether you believe what the IRS is saying to be true.
If you do not think they are right, or if there has been a mistake, it is your right to appeal the information brought forth by the IRS.
What Will Happen to My State Refund?
The IRS will seize your state refund and apply it to your tax debt. If this covers the entirety of the debt, then the matter will be closed—although a lien will have been placed against you. If it does not, then they will seize further assets to cover the amount owed. Note: as of 2018, the IRS can direct a state department to deny or revoke your passport. While these cases are few and far between, it is not outside of the realm of possibility.
Take the Matter Seriously
With the large swath of IRS notices, some are obviously less important than others. Unfortunately, the IRS Notice CP504 is not one to be taken lightly, ignored, or handled in the last moment. This is a notice to review, study, and then carefully draft a plan of action, seeing as a failure to do so can result in a loss of property, wages, bank accounts, and more. While this is not a final notice, it indicates the one to come; the one you never want to see you in your mailbox.
This is why we recommend you hire a tax professional, as they can guide you through these problems, communicate with the IRS in your name, check on your IRS refund status, and recommend certain routes to take that will complement your circumstances best.