Received CP504B?
Learn How to Protect Your Business Assets 

Receiving a CP504B from the IRS can be overwhelming, especially when you do not know what this means for you or what the next step should be. But you’re not alone – according to the IRS, it sends more than 40 million notices to business owners every year. 

Like other IRS notices, responding to the CP504B is critical; ignoring it only worsens your situation. When dealing with a CP504B, time is of the essence, so let’s get started with everything you need to know. 

Key Takeaways 

• Notice CP504B: A notice informing business taxpayers of the tax they owe the IRS and potential levies.
• Risk of ignoring the notice: If you don’t respond, the IRS has the authority to seize assets, levy bank accounts, file a federal lien, or enforce any other involuntary collection action.
• Timeline: You have 30 days after receiving the CP504B to appeal or make payment arrangements with the IRS before the seizure begins.
• 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 CP504B?

IRS Notice CP504B is the Notice of Intent to Levy that’s sent to businesses. A levy is when the IRS seizes an individual’s or a business’s assets and bank accounts to pay their tax debt. The Notice CP504B is the IRS’s way of warning or notifying you that they intend to take forced actions against your business.

You typically receive the CP504B a few weeks after receiving the CP161 Notice, which is the initial letter of demand. If you ignore the CP504B, it’s followed by the LT11B/Letter 1058. 

The IRS notice includes the following: 

• Tax year of the amount due
• Amount due
• Payment deadline
• Intent to seize your property or rights to property
• Possible denial or revocation of the United States passport
• Payment options
• Failure to pay the penalty and interest 
• IRS contact information 

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 to seize their state funds, property, and assets to cover the tax debts.

In contrast, the CP504B is sent to business taxpayers and has more urgent and more severe consequences. These include seizure of accounts receivable, business assets, and business property. 

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 I Receive the CP504B Notice?

Why you? Well, the notice is typically sent out for a few reasons, all revolving around unpaid tax debts. Here are some common reasons businesses receive the notice:

• Unsettled tax debts: Back taxes are the leading reasons 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. This could be requests for additional information or an adjustment to your tax return. When dealing with the IRS, responding to notices on time can help prevent the escalation of enforcement actions, such as liens or levies.
• Unfiled tax returns: If your business hasn’t been filing tax returns for a year or more, the IRS may estimate how much you owe, you’ll receive several notices, and ultimately, the CP504B after the IRS assesses taxes or penalties against your business. 
• Tax assessment differences: After filing returns, the IRS reviews them, and if they find any discrepancies, they start following up on the balance. The difference could be from omitted errors or incorrect deductions claimed on your return.
• Audit-related adjustments: If your business is audited and this resulted in additional tax due, and you’re yet to make the payment, the IRS may start sending you notices to collect what you owe. 

As you’ve seen, it all starts with an unpaid tax debt. The IRS will send you different notices reminding you what you owe, and eventually send you the CP504B if all their letters go unanswered. 

Consequences of Ignoring CP504B

It’s very tempting to just add the CP504B in the pile of other bills and forget it, but ignoring it doesn’t erase the consequences. If you don’t respond to this notice, the IRS has authority to levy your assets. They can seize the following: 

• Social security benefits
• Bank accounts
• Business assets
• Wages
• Account receivables 
• Real estate commissions, rental income, and any other income

The IRS will also issue a tax lien if it hasn’t already. Federal tax liens attach to your assets and their future proceeds. Any income you get from the assets or from selling the assets goes to the IRS. It also means you can no longer borrow against these assets unless the IRS subordinates the lien. 

Besides your principal tax debt, you’ll incur penalties and interest on your tax account. The failure to pay a penalty accumulates every month up to 25% of what you owe. In addition, the interest continues to accrue until you clear the tax debt. 

What to Do When I Receive a CP505B Notice?

Never ignore this notice. The CP504B indicates tax matters that require your immediate attention to avoid the consequences we discussed. Here are the steps to take:

Review your notice

The first thing to do when you receive your notice is to review it and understand its contents. How much does it say you owe? And what’s your payment deadline? The notice will also have instructions on what you can do to resolve your tax debts. While in some cases it might mean tax debt or adjusted tax debt, sometimes it can just be an error that can be rectified. 

Understand your options and rights. 

You have several rights and options as a taxpayer under IRS regulations, including:

• Right to appeal: If you disagree with the notice, you have the right to appeal through the Collection Appeal Program (CAP). 
• Right to consult a tax expert: You’re entitled to seek professional advice and representation. This is also critical if you’re planning on appealing your CP504B notice. 

Contact the IRS

You can contact the IRS by phone or mail, depending on your situation. If you need an urgent clarification, calling is the better option. However, a letter is better if you’re filing a formal dispute or providing supporting details. Whatever method you choose, keep a record of your communications. 

Provide necessary documentation or details.

If you’ve decided to dispute, gather the supporting documents for your case. You may need the following:

• Previous tax returns to verify your claims and correct the discrepancies 
• Proof of payment if you’ve already paid the tax amount, the IRS is claiming you’ve not paid
• Financial records showing proof of income, claimed deductions, or credits you’ve reported. 

Explore payment options

If you agree with the amount of tax debt, the IRS has payment options that allow you to pay less than you owe, pay monthly, or just pause collections until you’re financially stable (in IRS standards) to pay the debt. Here are more details on the IRS payment options:

• Penalty abatement: Requesting a penalty abatement can help reduce the amount you owe. For example, if you have a reasonable cause as to why you didn’t file tax returns in time (like death, illness, fraud, or natural causes), the IRS can waive the penalties. 
• Installment agreements: This option lets you pay off the full amount in monthly payments. Keep in mind that payment plans have different rules for businesses and individual tax debts.
• Offer in Compromise (OIC): You can settle your tax debt for less with an OIC. The IRS is very strict about approving OIC offers and will only accept them if the proposed offer is close to what the agency can collect if it pursues collections. Businesses may be able to qualify for an OIC if they’re no longer operating, but not on trust fund taxes. 
• Currently not Collectible (CNC): If you can prove that you can’t afford to pay the tax debt without financial hardship, the IRS can put your account on CNC status. This is temporary, and the IRS will periodically review your account to see if your finances has improved to resume collections. The IRS can still seize your tax refunds even when your account is on CNC. 

What If You Ignore the CP504B Notice

If you ignore this notice, the IRS may take the following actions after the 30-day deadline:

• Seize tax refunds – the IRS can seize state and federal refunds and apply them to your tax debt.
• Serve a disqualified employment levy – if your business owes payroll tax and you’ve appealed a payroll tax debt in the last two years, the agency can move forward with seizing certain business assets with no additional notices.
• Serve a contractor levy – the IRS can also intercept 100% of payments to federal contractors with no additional notices.

The IRS must send an additional notice before seizing other business assets, such as bank accounts, third-party payments (for example, rent or accounts receivable), inventory, equipment, etc. Those Final Intent to Levy notices give you 30 days to request a Collection Due Process (CDP) hearing or make payment, and if you don’t do either, the IRS will start seizing business assets.

When and Why You Should Hire a Tax Expert

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

• Immediately, if you receive a CP504B, You received one because you’ve already ignored other notices, and the IRS considers your tax debt severe, and the consequences will be hard to undo. Reaching out immediately can improve your resolution odds. 
• You accept the debt but can’t pay in full: A tax expert can help you explore other payment options to prevent forceful collection.
•  If you disagree with the tax debt, if you feel like the IRS made a mistake, you’ll need to appeal. A tax expert can help organize the supporting documents and take over the appeals process for the best outcome. 
• If you want help dealing with the IRS, negotiating with the IRS can be emotionally draining, confusing, and prone to errors. A tax pro can help with everything.

At Damiens Law, we deal with all kinds of tax problems, and that includes CP504B notices. We can help you resolve your 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 answers to common questions about CP504B:

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. If the notice wasn’t delivered through mail, to your place of business, or in person, the IRS will need to send an additional notice before seizure.

When will the IRS start levying assets after sending CP504B?

The IRS can start levying your assets 30 days after sending the notice, but in some cases, the IRS may send an additional notice before it moves on with the levy. 

Ready to Deal With Your Unpaid Business Taxes?

If you received a Notice CP504B, the IRS is ready to seize your bank accounts, assets, account receivables, etc. In extreme situations, the IRS can even close your business and sell your equipment to recover the tax debt. 

It doesn’t have to get there, though. We can help you determine the best course of action for you and prevent forced collections. Whether you need to apply for payment agreements, penalty abatements, or OIC, we’ve got you covered. 

Reach out to us today at 601-873-6510, and let’s get started. Remember, a day could be the difference between you resolving your debt and watching the IRS seize your assets.