IRS CP504 Notice: What "Intent to Levy" Means and How to Respond

What a CP504 notice means

The CP504 is titled a Notice of Intent to Levy. By the time you receive one, the IRS has typically sent a bill and two or more reminders (CP14, CP501, CP503) and the balance is still unpaid with no arrangement in place.

The CP504 tells you that if you don't pay by the date on the notice, the IRS can:

• Levy your state income tax refund. The law allows this right away, without the 30-day hearing notice that comes before most other levies. If you're expecting a state refund, plan on it being applied to your IRS balance.
• Move toward levying other property and rights to property. That includes wages, bank accounts, retirement income, Social Security and other federal payments, business assets, and accounts receivable.
• File a Notice of Federal Tax Lien, if it hasn't already.

CP504 vs. the Final Notice: an important distinction

Many people, and some websites, treat the CP504 as the final notice before wage garnishments and bank levies. Usually, it isn't. For most levies, the IRS must first send a Final Notice of Intent to Levy and Notice of Your Right to a Hearing, generally Letter LT11 or Letter 1058. That notice gives you 30 days to request a Collection Due Process hearing.

So why act on a CP504 with urgency? Because:

1. The Final Notice can follow the CP504 quickly, sometimes within weeks.
2. Some levies, like a levy on a state tax refund, or certain federal payments for some taxpayers, can happen without that prior hearing notice.
3. If the Final Notice goes to an old address and you never see it, the 30 days can run out before you know they've started.
4. Resolving things now avoids the Final Notice altogether and keeps every option open.

Other consequences at the CP504 stage

• Your federal refunds will be kept and applied to the balance.
• Passport risk. If your total balance exceeds the seriously delinquent tax debt threshold (currently over $60,000, adjusted annually for inflation), and you don't have a payment plan or other arrangement, the IRS can certify the debt to the State Department. That can lead to denial or revocation of your passport.
• Private debt collection. Some older, inactive balances are assigned to private collection agencies under contract with the IRS. The IRS tells you in writing before that happens.

What to do right now

1. Don't ignore it, and don't panic-pay with money you need for rent. There are almost always better options than draining an account.
2. Gather every IRS letter you've received, for every year.
3. Call us, or request a call back. We'll file a power of attorney (Form 2848), pull your IRS transcripts, and see exactly where every year stands, including whether a Final Notice has already been issued.
4. Get a resolution in place. Once an installment agreement is pending or approved, the IRS generally can't levy. If you can't pay anything, currently not collectible status stops collection. In the right circumstances, an offer in compromise can resolve the debt for less.
5. File anything that's missing. Missing returns are the most common reason resolutions stall. See unfiled tax returns.

CP504 for businesses

Businesses get a version of this notice too, often for unpaid payroll tax (Form 941) balances. For a business, the stakes are higher: a levy on the operating account or on customer payments can disrupt payroll and operations. If your business has a CP504, the IRS will expect current deposits to be made before it agrees to any resolution. See payroll tax debt.

How we handle CP504 cases

Speed matters at this stage, so we start with the urgent questions: Has a Final Notice gone out? When? Are there levies in place already? Are any returns missing? Then we contact the IRS collection unit on your account, propose a resolution, and request a hold on collection while it's finalized, where the IRS will grant one. When the agreement is in place, we confirm it in writing and make sure you know exactly what's needed to keep it in good standing.