If you’re struggling with a tax debt, chances are you’ve already received the CP 501 and CP 502 notices from the IRS. Both of those notices advised you of the total amount due, including interest and penalties. What if you blew off those notices, or put them in the “read later” pile? The IRS then issues the CP 504 notice, or Notice of Intent to Levy. It’s the IRS’s way of saying, “We mean business.”
The CP504 is only sent if you haven’t responded to any previous correspondence from the IRS regarding your tax debt, either by phone or by mail. The IRS is essentially asking you to pay up or run the risk of asset levy or asset seizure.
Consequences of Ignoring the CP504
If you don’t respond to the CP504, the IRS can begin to take action against you in order to recover the money you owe to them. This can include:
- Levying your state tax refund. If you will be getting a refund on your state income taxes, the IRS can seize that money in order to recover the money you owe them.
- If your state tax refund isn’t enough to cover the balance owed and interest penalties, the IRS can place a federal tax lien on any profits you receive from selling a major asset such as land or a home. A federal tax lien is also considered a public record which will show on your credit report.
The IRS can also seize bank accounts, investments, autos, RVs, and insurance policies in order to recover the debt you owe them. The IRS can also garnish your wages. In other words, ignoring a CP504 notice has serious long-term consequences that could jeopardize your financial well-being.
What You Can Do
Contact the IRS the day you get the notice in the mail. On the letter you’ll find a phone number for the IRS and any other contact information. Contact them immediately as a show of good faith that you’re working to resolve the tax debt.
If you disagree with the amount due, you can file an appeal. It may not resolve the debt altogether, but it does demonstrate that you are being proactive in resolving the debt.
Request an installment plan. There is no charge to set up an installment plan, but it is imperative that you make those payments on time without fail.
Better yet, get in touch with a qualified tax advisor who can inform you of your rights in dealing with the IRS. A qualified tax pro can also correspond with the IRS on your behalf, which is to your benefit if the thought of dealing with the IRS leaves you feeling intimidated or tongue-tied.
Your tax pro can also assess your financial situation to see if you would qualify for an installment plan, Offer In Compromise or any other abatement program. By understanding your rights and options, you and your tax pro can map out a strategy for addressing and eventually resolving your tax debt.
The IRS CP504 notice is sent after you don’t respond to any of their earlier notices. Ignoring a CP504 notice can result in result in asset seizure of levy as the IRS attempts to recover the debt you owe them.
If you receive a CP504 notice, don’t ignore it. Contact the IRS yourself, or enlist a qualified tax advisor to walk you through the process. We have Enrolled Agents and tax attorneys on staff to assist you in dealing with your outstanding tax debt and the IRS.
Why go it alone if you don’t have to? Get started today by clicking the white “Start Chat” button at the top right-hand corner or by giving us a call. Don’t let the IRS get the upper hand.