IRS Notice CP504 means that the IRS is going to seize your state tax refund and get ready to start seizing other assets. CP504 is typically the third collection notice sent to individuals with unpaid taxes, and it tends to be the fourth notice that businesses receive.

In most cases (exceptions explained below), you will receive an additional notice before the IRS starts taking property, but to protect yourself, you should contact the IRS and make payment arrangements as soon as possible. Contact the team at Damien’s Law to get help today. 

Key takeaways

• CP504 – IRS notice of intent to seize property and rights to property.
• What to do – Contact the IRS to request monthly payments or tax relief. 
• What if you don’t respond – IRS will seize your state tax refund and start the process for seizing wages and other assets.

What Is IRS Notice CP504?

Notice CP504 is a final notice of intent to levy property. In plain English, that means that the IRS is going to start taking your assets to cover your unpaid tax bill. Right now, the agency is only going to seize your state tax refund, but you should take action if you want to protect your other assets. 

The CP504 notice also notes the IRS’s right to tell the State Department to take away your passport. Under the terms of the FAST Act, this can happen if you have seriously delinquent tax debt – which means tax debt above $65,000 as of 2025. The number is indexed to inflation. 

What to Expect If You Receive Notice CP504

At this point, the IRS can seize your state tax refund. If that doesn’t cover the full bill, the IRS may file a federal tax lien, and the agency will also make plans to garnish your wages, take the money in your bank account, and seize your assets. 

Don’t panic – right now, your assets are safe. In most cases, the IRS must send you another Final Intent to Levy that Outlines Your Right to a Hearing before seizing any wages or assets, but there are a few exceptions:

• Disqualified employment levy – You owe payroll taxes and have requested a hearing related to payroll taxes in the last two years.
• Federal contractor levy – you work as a federal contractor for the United States, and the IRS seizes payments due to you from the government. 
• Jeopardy levy – The IRS has significant reason to believe the collection of the tax is at risk if they don’t act quickly. 

If any of the above exceptions apply to you, contact the IRS immediately or reach out to a tax attorney for help. 

Why Did the IRS Send Me a CP504 Letter?

The IRS sends Notice C504 to anyone who owes a balance on their tax bill and hasn’t made arrangements to pay. This letter follows IRS Notices CP501 and CP503, which are the first and second reminders from the IRS about your due tax bill. You may also receive CP14 about your balance due.

If you fail to respond to these notices, the IRS sends CP504.

How to Respond to an IRS CP504 Notice

If you agree with the notice – pay in full online or by mailing a payment to the address on the notice. Consider the following options if you can’t afford to pay the full balance: 

• Installment agreement (IA) – set up a monthly payment plan.
• Offer in compromise (OIC) – negotiate with the IRS to settle the taxes owed for a lesser amount.
• Currently not collectible (CNC) – show that you cannot pay the tax bill due to financial hardship, and the IRS will formally put a halt on all collection activity.

Making arrangements with the IRS will help you avoid additional penalties, and if you act promptly, you may also be able to avoid a tax lien.

If you disagree with the notice – contact the IRS at the phone number on the notice if you disagree with the balance due shown. If you want to appeal the tax lien or levy, you can request a managerial review through the Collection Appeal Program (CAP).

To request a Collection Appeal, call the IRS and let them know. If you’re already in contact with a Revenue Officer, call and ask to speak with a Collection Manager. Then, within three days after talking with them, file Form 9423 to appeal. There are strict deadlines and procedural requirements, so consider working with a tax resolution professional.

If you already paid in full – The IRS says to ignore this notice if you made full payment in the last 21 days. If you made your payment more than three weeks ago, check your online account for payment verification or call the IRS to ensure they received the payment. 

What If You Ignore Notice CP504

If you ignore this notice, the IRS will continue to add penalties to your account, the agency will also:

• Seize your state tax refund.
• File a federal tax lien.
• Contact the State Department to take away your passport if your debt is seriously delinquent. 
• Take the next steps toward seizing your assets. 

Unless you’re dealing with one of the exceptions noted above, the IRS must send you another notice before seizing assets (for example, LT11, LT1058, or CP90). That notice will give you 30 days to request a CDP hearing or pay the taxes. If you don’t respond by the deadline, the IRS will garnish your wages, freeze the funds in your bank account, and possibly take real or personal property. The IRS can also seize investment accounts, Social Security payments, some pensions, business assets, and even your home in extreme situations. 

IRS Notice CP504 – FAQs

How do I respond to IRS Notice CP504?

If possible, you can respond to a CP504 notice by paying the amount owed immediately. You can make payment online, or send a check or mail order to the address shown in your letter.

If you can’t pay the balance in full, consider requesting an installment agreement with the IRS, or applying for an offer in compromise. You might also be eligible for currently not collectible status, which puts a hold on all IRS collections activity against you.

What if I want to dispute Notice CP504?

If you want to dispute your tax liability, find the relevant contact information from the IRS on your CP504. Or contact a tax attorney to help you.

Can I request a Collection Due Process hearing?

At this point, you cannot request a CDP hearing. You must wait until you get a notice that outlines your right to a hearing. However, you can request a review through the Collection Appeals Program. 

Does the IRS have to send another notice before taking my passport?

No. If you have seriously delinquent tax debt, the IRS can notify the State Department to take away your passport, without sending you an additional notice. 

Can I get the penalties from CP504 waived?

The IRS may waive the penalties if you are normally compliant with tax regulations and you haven’t incurred penalties in the last three tax years. You may also qualify for penalty abatement if you had reasonable cause (ie. death, illness, natural disaster, etc.) for paying or filing late.

What if my former spouse was ordered to pay this debt in a divorce decree?

Unfortunately, you are legally liable for all tax debt on a jointly filed return, even if a divorce decree says that your former spouse must pay it. However, if this debt was incurred by your spouse without your knowledge – for example, the IRS audited the return and found out that your former spouse didn’t report income – you may qualify for innocent spouse relief. 

What is the QR code on this notice?

IRS now includes QR codes on the notices where you can scan the QR code with your phone to get redirected to a page to make payment to the IRS. 

Is My CP504 Notice Legitimate? 

To be certain that your CP504 notice is real, scan it for any potential red flags, such as poor grammar, spelling mistakes, or explicit threats of jail time. Remember that the IRS will never issue a letter with threatening language. Call a tax attorney if you are unsure whether or not the letter is really from the IRS.

Resolve Your Tax Debt Issues

Receiving a notice from the IRS is always a stressful event. A lot of people ignore these notices due to the stress, but once the situation gets to this point, you need to respond. 

Unfortunately, however, it may also be difficult to know how to proceed and resolve the issue if your tax situation is complex. Remember that the most important thing is to address it, one way or another. Ignoring a CP504 notice won’t do you any favors. 

If you’re struggling to know where to begin and how to deal with your tax liability, you will benefit from working with an experienced tax firm. At Damiens Law our expert tax attorneys know the IRS inside and out, and we can help you navigate your way to a resolution while taking some of the load off your shoulders. We offer customized solutions for all of our clients – get in touch with us today if you’ve got a tax liability that needs resolving.