A CP504 notice of intent to levy is the IRS's warning that an unpaid balance is moving toward enforced collection. It lets the IRS take your state tax refund if you do not pay or make arrangements, and it signals that a final notice, which opens the door to levies on wages and bank accounts, may follow soon. You still have options at this stage.
If a CP504 is on your desk, call (415) 754-0115 to schedule a free consultation, or reach us through the contact page before the date on the notice passes.
Reading the notice itself
The CP504 lists the tax periods involved, the balance with penalties and interest, and a due date. Check each figure against your own records. Balances are sometimes wrong because an estimated payment was applied to the wrong year, a return was processed with an error, or the IRS prepared a substitute return with no deductions after you did not file. If a period on the notice surprises you, request an account transcript to see how the balance was built before deciding how to respond.
Where the CP504 sits in the IRS notice sequence
IRS collection follows a predictable ladder of letters. The exact path varies, but for many individuals it looks like this:
- CP14, the first balance-due notice after a return is processed or an assessment is made.
- Reminder notices, such as the CP501 and sometimes the CP503.
- CP504, the notice of intent to levy under the federal levy statute.
- LT11 or Letter 1058, the final notice of intent to levy with your right to a Collection Due Process hearing. Some taxpayers receive a CP90 instead.
- Levy on wages, bank accounts or other assets if nothing is resolved.
Many people assume the CP504 is the last word before a bank levy. It is an important warning, but the separate final notice with hearing rights generally has to come before the IRS can levy wages or bank accounts. That gap is useful time, not a reason to wait.
What the CP504 notice of intent to levy allows the IRS to do
Immediately after the notice period
If the balance remains unpaid, the IRS can levy a state income tax refund. For California residents, that can mean losing a Franchise Tax Board refund you were counting on.
Other steps that often follow
- A federal tax lien filing, a public claim against your property that can affect credit and property sales.
- Passport certification if the debt meets the definition of seriously delinquent. Our article on whether the IRS can take your passport over tax debt explains how that works.
- A final notice that starts a 30-day window to request a Collection Due Process hearing.
What becomes exposed after the final notice
Once the final notice and hearing window pass, the IRS can generally levy wages, bank accounts, accounts receivable, certain retirement funds and other property. Federal payments such as some Social Security benefits can be subject to continuous levy through a separate program. A wage levy continues each payday until it is released.
Ways to stop the escalation
The right option depends on what you owe, what you earn and what you own. Common paths include:
Paying or setting up a plan
If you can pay over time, an IRS installment agreement generally stops levy action while the agreement is in place and you stay current with it and with future filings.
Showing you cannot pay right now
If your income only covers basic living costs, the IRS may place the account in currently not collectible status after reviewing your financial information. Collection is paused, although the debt remains and interest continues.
Settling for less or contesting the balance
An offer in compromise may be possible when the full debt cannot realistically be collected. If the balance itself is wrong, for example because a return was never processed correctly or a payment was misapplied, the right move may be to dispute it. Penalty relief, including first-time abatement or reasonable cause, can reduce the total in some cases.
Where bankruptcy fits
Filing bankruptcy triggers an automatic stay that generally halts IRS collection while the case is open. Some older income taxes can be discharged if strict timing rules are met, and others can be paid through a Chapter 13 plan. An attorney can review whether that route makes sense for you.
Mistakes to avoid after a CP504
- Ignoring it because earlier notices led nowhere. The notice sequence is designed to escalate, and each step removes time.
- Moving money around to hide it. Transferring assets to relatives or emptying accounts can create serious legal problems and rarely helps.
- Agreeing to a payment you cannot keep. A defaulted installment agreement can restart enforcement quickly.
- Falling behind on current taxes. Most IRS relief requires you to be current on filing and, for the self-employed, on estimated payments.
Getting help while there is still time
The Somal Law Firm, led by attorney Bob Somal, Esq. in Pleasanton, helps individuals and small businesses in the Tri-Valley, Alameda and Contra Costa Counties with IRS disputes and tax problems, and also practices bankruptcy law, which allows the firm to weigh IRS resolution options and bankruptcy side by side. Responding at the CP504 stage usually leaves more choices open than waiting for a levy.
Frequently asked questions
Is the CP504 the final notice before my bank account is levied?
Generally not. A separate final notice with Collection Due Process rights, such as an LT11 or Letter 1058, usually comes first. Do not rely on that gap; respond now.
Will calling the IRS stop the levy process?
A call alone does not pause collection. Setting up an agreement, requesting a hearing when eligible, or submitting certain applications can.
Can the IRS take my California tax refund?
Yes. After a CP504, the IRS can levy a state income tax refund to apply toward the federal balance.
When you call, the firm will ask for your notices and a snapshot of your finances, then schedule a free consultation to review your options. Call (415) 754-0115 today, or use the contact form as a backup.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.