What Is an IRS CP504 Notice?

IRS Notices Explained
Written by Enrolled Agent
Reviewed by Enrolled Agent

A CP504 is a serious collection notice. It tells you the IRS intends to levy certain assets—often your state tax refund—and may file a federal tax lien if the balance remains unpaid. Here’s what it means, why you received it, and how to respond before enforcement escalates.

Quick Answer

An IRS CP504 is a collection notice warning that the IRS intends to levy certain assets—commonly your state tax refund—and may take additional collection actions if the balance is not resolved by the deadline on the notice. It signals that your account is moving deeper into collections and requires prompt action.

Important: The CP504 is not the final levy notice for all assets, but it is a clear warning that enforcement is escalating. Respond by the date shown on your notice to protect your options.

Why You Received a CP504

  • You have an unpaid tax balance from a filed return, adjustment, or prior notice.
  • Earlier balance-due notices were not resolved.
  • Your account has advanced in the IRS collection process toward enforced collection.

The CP504 typically arrives after reminder notices when the IRS is preparing to take stronger steps to collect. It’s a final reminder for certain levy actions and may be followed by broader levy notices if unpaid.

What the CP504 Means

The CP504 informs you that the IRS intends to levy eligible assets identified on the notice—often your state tax refund—and alerts you that a federal tax lien may be filed if the balance remains outstanding. A lien is a public claim against your property; a levy is an actual seizure of funds or assets.

The notice provides your balance, how interest and penalties continue to accrue, and a response-by date. Acting within the window on the notice keeps more resolution avenues available.

What to Do Next

You generally have a short, specific timeframe (shown on your letter) to respond before levy action proceeds. Consider these options:

  • Pay in full to stop collection on the assessed balance.
  • Set up an Installment Agreement to pay over time and halt active levy actions once approved.
  • Request currently not collectible (CNC) status if payment would cause hardship.
  • Consider an Offer in Compromise if you qualify based on your ability to pay.
  • Address penalty relief where appropriate (first-time abatement or reasonable cause).

If the amount due is incorrect, you can dispute or request adjustments with documentation. Quick engagement preserves rights and may prevent the lien filing or levy from moving forward.

Need a roadmap? Read our Complete Guide to Back Taxes in the U.S. for a step-by-step overview of filings, penalties, and IRS resolution options.

If You Ignore the CP504

Ignoring a CP504 increases the chance of a federal tax lien filing and further levy actions. Additional notices may follow that expand levy authority beyond a state refund to wages, bank accounts, or other assets. Penalties and interest continue to grow until the balance is resolved or placed into an approved resolution.

The sooner you engage, the more options you keep. Early action can prevent liens, stop levies, and reduce total costs over time.

How Polaris Can Help

Polaris Tax & Accounting represents taxpayers nationwide at every stage of IRS collections. Our Enrolled Agents review your notice, pull transcripts, verify balances, and match your situation with the right path—payment plan, hardship hold, settlement consideration, or penalty relief.

We handle the IRS conversations for you, document your case, and keep you compliant so your resolution stays in place. If state tax issues are also involved, we coordinate federal and state strategies in parallel.

Your Next Step: Protect your income and accounts. Schedule a consultation with an Enrolled Agent at Polaris.

Related Resources

FAQs

Is a CP504 the final levy notice?

A CP504 is a serious levy warning and may authorize levy of certain assets (often a state refund). Additional notices can follow that allow broader levies if the balance remains unpaid.

Will a CP504 lead to a federal tax lien?

The CP504 warns that a lien may be filed if the balance is not addressed. A lien is a public claim against your property and can affect credit and financing.

How long do I have to respond?

Use the deadline printed on your notice. Acting within that window preserves rights and helps prevent levy or lien actions from moving forward.

© Polaris Tax & Accounting. Nationwide Enrolled Agent representation. This content is educational and not a substitute for personalized advice.