IRS CP504 & CP504B Notices

How to Protect Your Assets & Respond to an IRS Levy Notice 

If you don’t pay your tax debt or penalties after the first few collection notices, the IRS will send a CP504 Notice of Intent to Levy. The CP504 goes to individuals, while the CP504B goes to businesses. At this point, the agency can only seize your state tax refund and possibly contractor payments if your business works for the federal government. 

The agency must send a Final Notice with your rights to a hearing before pursuing any other collection actions like bank levies or wage garnishments. To protect yourself, you should respond to the CP504/504B notice to avoid escalation. 

If you or your business owes the IRS, Damiens Law can help you with IRS tax notices. Don’t wait – schedule a consultation with us today. 

Key Takeaways

• CP504:  IRS notice of intent to seize property and rights to property.
• CP504B: A notice informing business taxpayers of the tax they owe the IRS and potential levies.
• Timeline: You have 30 days after receiving the CP504B or CP504 to appeal or make payment arrangements with the IRS before it seizes your tax refund.
• Risk of ignoring the notice: If you don’t respond, the IRS will escalate collections.
• Tax expert consultation: Whether you want to appeal or make payment arrangements, working with a tax expert ensures you get the best possible outcome.

What Is IRS Notice CP504?

Notice CP504 is an intent to levy notice. It alerts you that the IRS has the right to take your assets to cover your unpaid tax bill. Right now, the agency will only seize your state tax refund, but you must take action if you want to protect your other assets. 

The CP504 notice also notes the IRS’s right to instruct the State Department to revoke your passport. Under the terms of the FAST Act, this can happen if you have seriously delinquent tax debt, which means tax debt above $66,000 as of 2026. The number is indexed to inflation. 

CP504 vs CP504B

The IRS Notices CP504 and CP504B are similar in that they’re both final reminders to pay tax debts; the difference is the recipient. The CP504 is a notice of intent to levy that notifies an individual of the potential seizure of their state funds, property, and assets to cover tax debts.

In contrast, the CP504B is sent to business taxpayers and has more urgent and aggressive consequences. These include seizure of accounts receivable, business assets, and business property, but again, the agency typically must send another notice before taking those assets. 

While the IRS website has nearly identical information on these two forms and doesn’t make any distinction, at a closer glance, you can spot the differences. For example, you’ll see the CP504 has information on individual taxes while the CP504B has information on business taxes. That is, the CP504B has an employer identification number on top, while the CP504 has an individual taxpayer identification number. 

Why Did the IRS Send Me a CP504 Letter?

Why you? Well, the notice is typically sent for a few reasons, all related to unpaid tax debts and penalties for yourself or your business. Here are some of the most common reasons:

• Unsettled tax debts: Back taxes are the leading reason why the IRS sends this notice. The notice will cover any amount that you haven’t paid in full by the deadline.
• Ignored IRS notices: You may also be receiving this notice because you’ve been neglecting the IRS communications about adjustments to your return, penalties, or other tax liabilities.
• Unfiled tax returns: If you haven’t been filing tax returns for a year or more, the IRS may estimate how much you owe. Then, they’ll send several notices and eventually a CP504 or CP504B. 
• Tax assessment differences: You may owe tax due to an adjustment the IRS made to your return. The difference could be from omitted errors or incorrect deductions claimed on your return.
• Audit-related adjustments: If your business owes additional tax and penalties after being audited, the IRS may start sending you notices to collect what you owe and eventually a CP504B if you ignore the notices. 
• Penalties for not filing informational returns: Businesses may receive a CP504B even if they don’t owe business taxes. In particular, you may get this notice if you incurred penalties for not filing informational returns, and you haven’t paid them yet.

As you’ve seen, it all starts with an unpaid tax debt or penalties. The IRS will send you various notices reminding you of what you owe and, if all their letters go unanswered, eventually send you the CP504. 

What to Expect If You Receive Notice CP504/CP504B

At this point, the IRS can seize your state tax refund or make plans to enforce more aggressive collection actions. In fact, the agency can actually seize your tax refund before sending you this notice. As of August 2026, the IRS does not seize state refunds to businesses, but according to the agency’s CP504B page on its website, they plan to start seizing business refunds soon. 

Before seizing any wages or assets, the IRS must send you another Final Intent to Levy that outlines Your Right to a CDP Hearing, but there are a few exceptions when the IRS may levy you without sending the final intent to levy notice first. These instances include:

• 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, and the IRS seizes payments due to you from the U.S. 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. 

How to Respond to an IRS CP504 Notice

This depends on whether or not you agree with the notice; you do this by pulling your tax transcripts and confirming the balance, penalties, and pending enforcement notes:

If you agree with the CP504 notice:

The best way to resolve this is to pay in full online or by mailing a payment to the address on the notice. However, if you can’t afford to pay the balance in full, consider the following options: 

• Installment agreement (IA): This allows you to pay your tax debt in manageable monthly payments. The IRS has multiple options for businesses and individuals.
• Offer in compromise (OIC): This relief option allows you to settle with the IRS for less than you owe if you can’t afford to pay. Businesses can settle some but not all debts, and it’s generally harder to get approved if you’re still in operation. 
• Currently not collectible (CNC): If you can prove that making any payment toward your tax debt will cause financial hardship, the IRS can place your account on CNC status, which temporarily pauses most collection activity.

Being proactive in addressing your tax liability may prevent additional penalty and interest charges and eliminate the need for the IRS to take aggressive collection actions to collect the balance. 

If you disagree with your CP504 notice:

Here are some of the options for when you don’t agree with either the CP504 or CP504B notice:

• Contact the IRS: Call the IRS at the toll-free number towards the top of the second page of your notice. Ensure you have your paperwork (such as cancelled checks, amended returns, etc) ready when you can call.

• Request an appeal under the Collection Appeals Program (CAP): If you want to appeal a proposed tax lien or levy, you can request a managerial review through the Collection Appeals Program (CAP). Call 800-829-0922 or send the IRS Form 9423. 
• Request penalty abatement: If you believe you have an acceptable reason for interest or a penalty to be removed or reduced, complete Form 843 or send a letter.

The IRS says to ignore this notice if you made a 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 confirm the agency received it. 

What If You Ignore Notice CP504

If you ignore this notice, the IRS will continue to add penalties to your account, and in addition to seizing your state tax refund, the agency may also:

• File a federal tax lien against you or your business if they haven’t done so before.
• Contact the State Department to have your passport revoked if your debt is seriously delinquent. 
• Take the next steps toward seizing your assets, levying your bank account, or garnishing wages. 

The IRS can also seize investment accounts, Social Security payments, retirement accounts, business assets (cash drawers, inventory, fixtures, receivables, real estate, etc), and even your home in extreme situations. 

Levy Notice Vs. Final Levy Notice With Right to Hearing

The language in the CP504 makes it sound like the IRS is going to take your assets immediately, but the agency must send a Final Notice With Your Right to a Hearing first, usually LT11 or LT1058. Here’s a breakdown of the differences. 

When and Why You Should Hire a Tax Expert

Should you hire a tax expert to deal with your CP504 or CP504B, and if so, when is the best time to involve one? Here are a few tips on when:

• Immediately when you receive the notice
• If you accept the debt but want help making payment arrangements.
• If you disagree with the tax debt
• To get help dealing with the IRS

At Damiens Law, we deal with all kinds of tax problems, including CP504 and CP504B notices. We can help you resolve your individual or business tax issues and advise you on how to stay compliant moving forward. 

Despite having dealt with hundreds of similar cases, we treat every client as a unique case to ensure we give the best outcome that aligns with their goals. 

Frequently Asked Questions ( FAQs)

Here are common questions we get on notices CP504 or CP504B:

How do I respond to IRS Notice CP504?

If you agree with the CP504 notice, you can respond by paying the amount owed immediately. You can make a payment online, or send a check or money order to the address shown in your letter. If you can’t pay the balance in full, consider requesting other tax relief options, such as an installment agreement, CNC status, or a settlement.

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 for help. 

Can I request a Collection Due Process hearing?

At this point, you cannot request a CDP hearing. You must wait until you receive a final notice to levy ( LT11/Letter 1058) outlining your right to a hearing. However, you may be able to request a review through the Collection Appeals Program, but it depends on the timing and proposed actions. 

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

Yes. If you owe a seriously delinquent tax debt, you’ll receive a CP508C notice, letting you know the IRS has certified your debt to the State Department and Letter 6152 before revoking your passport.

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. As for the summer of 2026, the IRS will automatically apply the first-time abatement for taxpayers who qualify. You may also qualify for penalty abatement if you had reasonable cause (ie, death, illness, natural disaster, etc.) for paying or filing late.

How long do you have to respond to notice CP504B?

You’re required to respond by the date specified on the notice, typically 30 days after the notice was sent. 

How does the IRS send Notice CP504B?

The IRS sends the Notice CP504B through certified mail to your last known address. The IRS can only seize assets if it sends notices to your last known address (even if it’s outdated) or hand-delivers the notice to you.

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.

Need Help With Notice CP504?

If you’re struggling to know where to begin and how to deal with your tax liability, we can help. 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 to be resolved.