The IRS CP504 Notice and CP504B Notice

We continue our series on IRS notices by discussing the Notice of Intent to Seize (Levy) Your Property or IRS CP504 or CP504B Notice. While the verbiage of this notice can be somewhat confusing and cause some undue alarm, this blog post will discuss what the notice means and how one should confront it.

The IRS issues CP504 notices to individual taxpayers who have tax delinquencies. The IRS issues CP504B notices to corporations, partnerships, and other business entities with tax delinquencies. The CP504 and CP504B serve as a warning shot of sorts. A taxpayer who receives the notice should take the warning seriously, but at the same time the taxpayer may have time to act before the IRS takes collection action. After all, it is a warning shot.

The verbiage of the CP504 or CP504B notice is stern. While the IRS CP14 Notice or IRS Amount Due Notice is typically the first notice the IRS sends to taxpayers owing money, the CP504 or CP504B is the first notice which threatens levy and other collection actions. The notice may even state “Final Balance Due” implying the IRS is about to spring into action at any moment. While a taxpayer should take CP504 and CP504B notices seriously, they do not necessarily indicate the IRS will initiate levies at any moment.

In all but a few rare cases, the IRS must issue a Final Notice of Intent to Levy before it can levy a taxpayer’s bank account or levy a taxpayer’s wages. A Taxpayer has the right to file an appeal before the IRS levies bank accounts or wages. A Taxpayer who receives a CP504 or CP504B notice should certainly not sweep the problem under the rug, but they should not live in fear the IRS will levy their assets at any moment. In almost all cases, the IRS still must issue the Final Notice of Intent to levy before it can levy bank accounts, wages, or other assets.

The one thing the IRS can do without any further notice after it issues a CP504 or CP504B notice is file a Notice of Federal Tax Lien. Once the IRS issues a CP504 or CP504B notice, the IRS can then file a Notice of Federal Tax Lien. Once it files the Notice of Federal Tax Lien, the tax lien is a public record that may be accessed by anyone. It is exceedingly difficult to have the IRS withdraw or release the Notice of Federal Tax Lien without the Taxpayer paying the tax in full. A Taxpayer that receives a CP504 or CP504B notice and wishes to avoid tax liens must act promptly.

If you receive a CP504 or CP504B notice, you should not panic. You should, however, take the IRS’ warning seriously and act promptly to rectify your tax issues. At RJS LAW, we have guided hundreds of Taxpayers through collection issues. Give us a call at 619-595-1655 for your complementary consultation.

Written by Joseph Cole, Esq., LL.M.