If you owe the Internal Revenue Service (IRS) back taxes, you will receive a series of letters informing you of where you currently stand. The longer you ignore these notifications, the more likely it is that you’ll find yourself holding a Notice of Intent to Levy, or a CP504 Notice. The breakdown of notices are as follows:
- CP14 and/or CP501: You owe unpaid taxes on one of your accounts.
- CP503: The IRS still hasn’t heard from you and you still have an unpaid balance
- CP504: An intent to levy, but it’s not the final notice. If you do not pay the amount due immediately, the IRS will seize your state income tax refund and apply it to pay the amount you owe.
- CP90 or LT11 or Letter 1058: Final Notice of Intent to Levy and Notice of Your Right to a Hearing.
The IRS sends a CP504 notice as a follow-up to previous letters informing you of your IRS tax debt and payment requests. The initial collection process starts with a Notice CP14 from the IRS. The CP14 is the first notice the IRS will send you informing you that you owe unpaid taxes.
If you’re unsure how to respond, unable to pay, unaware of how to set up a payment plan, cannot dispute the amount due, or are otherwise unable to resolve the situation on your own, the IRS will take further action to collect your debt, including issuing a CP504 notice.
If you receive a Notice CP504, you should consult with Paladini Law about your legal rights to avoid putting yourself in a greater financial or even unlawful bind. Enacting certain procedural rights can help protect your money and assets from IRS seizure by allowing you to enter into more affordable payment arrangements or possibly settle your debt for a lesser amount.
What Exactly Is the Purpose of a CP504 Notice and How Does It Affect You?
When the IRS sends you a CP504 notice, the government entity satisfies a legal requirement to give you notice of its intent to levy as necessitated by Internal Revenue Code section 6331(d). This notice means the government will find a way to forcibly take what is owed by searching for recoverable assets as payment.
Tax codes limit what the government can take with allowances for certain personal property and tools used to derive income (i.e., business tools or property). Limits also exist for expense categories, including housing, clothing, and transportation. Additionally, the IRS uses tax code limits to calculate what a taxpayer can actually pay, coming up with a Reasonable Collection Potential based on taxpayer answers provided on IRS financial disclosure forms. This determination does not eliminate your tax debt but can temporarily delay the collection process and allow you time to improve your financial situation to be better positioned to pay what you owe at a later date.
Paladini Law can help you navigate these forms and decide what assets are protected and which assets might be at risk. Request a Consultation Today.
Do Not Ignore a CP504 Notice
Ignoring the IRS only makes things worse. Not paying the full amount due or making an effort to contact the IRS or legal counsel to advise you of your options can be a financially injurious mistake. Even if you still have a partial outstanding balance, the government can seize or “levy” your state tax refund or take possession of other property.
You also might be in danger of the IRS filing a Notice of Federal Tax Lien on your property, interfering with your full rights to your property, and hindering your ability to sell or borrow against the property. These tax liens can affect your credit score, notify creditors of your obligation to the IRS, and place at stake your professional licenses.
If you haven’t already received a notice for the hearing, failure to pay can result in the notice given for you to appear before the IRS Independent Office of Appeals. After this time, your property or rights to your property is in jeopardy.
Property subject to seizure includes:
- Wages, real estate commissions, and other income
- Bank accounts
- Business assets
- Personal assets (including your car and home)
- Social Security benefits
How Can a New Jersey IRS Tax Attorney Help You Respond to Notice CP504?
Since receiving a Notice CP504 is a time-sensitive manner, the sooner you speak to an attorney, the better your chances will be of avoiding further action or hassle from the IRS. Instead, your attorney can handle all correspondence with the government office and inform them of your intent to resolve your debt to prevent additional collection efforts.
Your attorney can develop a strategy to respond. You’ll want to retrieve IRS account transcripts to ensure the amount owed is accurate. Once you’ve confirmed the correctness of what you owe, your attorney can help you devise a payment plan or come to a settlement that is agreeable to all parties. If you need to dispute the amount owed, your attorney can help you do so. You will need to file an appeal to receive a hearing where your attorney can help you plead your case to deter further collection efforts.
You might also have a reason to file an amended return to reduce the amount you owe. You can file certain amended returns electronically, while others you will need to send via mail. An amended return can take up to 16 weeks to process, whether filed online or submitted by paper filing through the mail.
Your attorney can also assist you with the preparation of a penalty abatement request. This abatement is applicable for certain taxpayers under the First Time Penalty Abatement policy and offers administrative relief from imposed failure-to-pay penalties. This relief might be available to you if you meet certain conditions per the IRS policy. Your attorney can review these conditions with you to determine if you qualify for this relief.
How serious is a Notice CP504?
A CP504 notice is serious; you do not want to ignore it. This notice is the IRS informing you of its intent to cover your debt by issuing a levy against your state tax refund, searching for and seizing your assets, and filing a Federal Tax Lien against your property interests affecting your rights to your property. Additionally, a Notice CP504 can result in the denial or revocation of your United States Passport per the Fixing America’s Surface Transportation (FAST) Act legislation. This legislation prevents state departments from issuing or renewing passports to taxpayers with seriously delinquent or unresolved tax debts.
How much time do I have to respond or take action?
Your balance is due by the date shown on the notice. Usually, the IRS gives you thirty (30) days to take corrective action when noticed with a CP504 form. By the time you receive a CP504 notice, though, your payment is technically past due.
Do I have to make a full payment right away to avoid additional penalties?
There are several different ways you can respond to a Notice CP504 if you are unable to pay, aside from making full payment. Paladini Law can inform you of the different avenues you can take to resolve your tax issue. Acceptable resolutions might include: filing an appeal, amending your tax returns, negotiating a payment plan, settling your debt for a lesser amount, and requesting administrative relief for your failure-to-pay penalties.
What if I’ve already paid my balance or taken other corrective actions?
Even if you’ve already taken corrective actions to resolve your IRS debt, you need to contact the number printed at the top of the CP504 notice to make sure your account reflects payments made, installment agreements entered into, disputes filed, or other actions are taken. Contact us to help ensure you are following proper procedures correctly and you have taken the appropriate steps to avoid further liability and aggravation.
Who should I contact if I have more questions?
If you have questions about your notice, there’s a number to contact the IRS in the upper right corner of the document. Printed directly under the contact number, there’s a caller ID assigned to you to have ready when you call. Additionally, you should contact Paladini Law to advise you of your rights.
Call Paladini Law to Resolve Your Notice CP504
If you’ve received a CP504 notice and you have questions or need legal advice about your rights, contact Paladini Law at (201) 381-4472 or schedule your free consultation now. Brad Paladini helps taxpayers in New Jersey and across the U.S. deal with the IRS, avoid tax penalties, and save their hard-earned money and property. Attorney Paladini is ready to review your case and help you determine if you need legal counsel to resolve your tax debt.