Quick overview

IRS CP504 is one of the final written warnings the IRS sends before it begins aggressive collection actions such as levying bank accounts, wages, or other assets. The notice signals that previous attempts to collect the tax balance have failed and that the IRS plans to take action unless the taxpayer pays in full or asks for relief within the time allowed (generally 30 days). For an official overview of final notices and levy procedures, see the IRS guidance on final notices before levy (IRS) and Publication 594, The IRS Collection Process (IRS Publication 594).

Why CP504 matters to taxpayers

A CP504 notice is important because it is effectively the IRS telling you a levy is imminent. A levy can freeze and remove funds from a bank account, garnish wages, or seize other property. These actions can cause immediate financial disruption for individuals and businesses. In many cases, a prompt response — even a phone call to the IRS or the filing of a timely appeal — will halt further collection while the IRS or Appeals reviews your situation. The right to a Collection Due Process (CDP) hearing is a critical protection; timely requesting it generally stops levy action until the hearing is resolved (see IRS Collection Due Process rules).

How CP504 typically works (step-by-step)

  1. Prior notices: Before CP504 arrives you usually receive earlier notices (example: CP14, CP501, or CP503) that alert you to a balance due.
  2. CP504 mailing: The IRS mails CP504 when prior notices didn’t resolve the liability. The letter explains the amount due, additional penalties and interest, and the deadline to act (typically 30 days from the date of the letter).
  3. Options described: The notice will list ways to avoid levy — pay in full, set up an installment agreement, submit an Offer in Compromise (OIC), request Currently Not Collectible (CNC) status, or file a timely request for a CDP hearing.
  4. Consequences if ignored: If you do not respond within the timeframe and no alternative arrangement is approved, the IRS can issue levies to collect the tax.

References: IRS — Final notices before levy (https://www.irs.gov/businesses/small-businesses-self-employed/final-notices-before-levy). See also Publication 594 (https://www.irs.gov/publications/p594).

Your rights and the Collection Due Process (CDP) hearing

If you receive a CP504, you generally have the right to request a Collection Due Process (CDP) hearing — typically within 30 days of the notice date. Filing a timely CDP request stops most levy actions while the IRS Office of Appeals considers your case. At a CDP hearing you can:

  • Challenge the existence or amount of the tax liability, or
  • Propose collection alternatives (installment agreement, offer in compromise, CNC) or otherwise explain why levy would be an undue hardship.

If you miss the CDP window, other remedies may still be available (e.g., a Collection Appeal Program), but they often provide fewer protections than a timely CDP request. For CDP rules and instructions, see the IRS Collection Due Process (CDP) information page (https://www.irs.gov/individuals/collection-due-process-cdp-appeals).

Immediate steps to take if you get a CP504 (practical checklist)

  • Read the notice carefully and note the deadline. Each day matters.
  • Confirm the balance and tax year. Match amounts on the notice to your records or tax transcripts.
  • Call the IRS using the number on the letter if you can resolve the balance quickly; keep detailed notes of name, badge number, and time.
  • If you cannot pay in full, consider the alternatives listed on the notice: short-term extension, installment agreement, Offer in Compromise, or CNC. Applying for an installment agreement will often prevent levy if the IRS accepts it.
  • Request a Collection Due Process (CDP) hearing within the time window if you want to challenge the levy or propose a collection alternative.
  • Get representation. If your case is complex or you’re uncomfortable speaking with the IRS, sign Form 2848 (Power of Attorney) to authorize a tax professional to represent you.

In my practice I’ve seen taxpayers stop a levy simply by calling promptly, verifying income and bank account details, and requesting the correct protection (CDP or installment). Even when the balance is large, the IRS frequently accepts installment plans that avoid an immediate levy.

Common scenarios and examples

  • Example 1 — Wage earner who responds quickly: A taxpayer ignored earlier notices and received CP504. They called the IRS the same week, submitted a direct debit installment agreement, and provided bank routing information. The IRS suspended levy processes while the agreement was set up.

  • Example 2 — Business owner facing bank levy: A small business received CP504 after unpaid payroll taxes. The owner requested a CDP hearing and simultaneously negotiated an installment plan. The hearing request prevented the bank levy while Appeals reviewed the case.

Note: Payroll taxes often have more aggressive collection timelines; if payroll taxes are at issue, take immediate action and consult a tax professional.

Mistakes to avoid

  • Ignoring the notice: Ignoring CP504 is the most common and costly mistake—the IRS can levy without further notice after the timeframe expires.
  • Assuming a levy won’t happen: Trusting that the IRS will delay action can lead to seized accounts or wages.
  • Using informal promises: Verbal promises without a formal agreement or a timely CDP request may not stop a levy.

Appeals and alternatives if you miss the deadline

If the levy happens because you missed the CP504 deadline, you may still have options:

  • Request release of the levy if it was issued in error or if it creates immediate economic hardship.
  • Apply for Currently Not Collectible status if you can show you can’t pay any reasonable amount.
  • Seek a Collection Appeal after-the-fact through the IRS Collection Appeal Program (CAP) or contact the Taxpayer Advocate Service if you face economic hardship and can’t resolve the issue (Taxpayer Advocate Service: https://www.taxpayeradvocate.irs.gov).

For step-by-step emergency responses to an active levy, see our guide: How to Stop an IRS Levy: Immediate Steps to Take.

How CP504 fits into the IRS notice timeline

CP504 is typically a later-stage notice in the IRS sequence of collection letters. To understand where CP504 sits relative to initial balance-due letters and earlier notices, see our timeline article: Understanding the IRS Notice Timeline: From Inquiry to Levy.

Practical tips from a tax professional

  • Document everything: Keep copies of letters, dates of calls, and any forms or bank receipts.
  • Don’t delay the CDP request if you want the strongest protection against levy.
  • Consider a short-term loan or a credit solution to pay the balance if that avoids a disruptive levy—this is sometimes less costly than dealing with frozen accounts or seized wages.
  • If the IRS is wrong about the amount, gather proof early (tax returns, receipts, transcripts) and file the dispute as part of your CDP hearing request.

Frequently asked questions (brief)

Q: How long do I have to respond to a CP504?
A: Typically about 30 days from the date on the notice, but always check your letter for the exact deadline.

Q: Will a levy happen immediately after CP504?
A: Not immediately — the IRS usually allows the notice period to pass. If you file a timely CDP request, levy action is generally stayed while Appeals reviews the case.

Q: Can the IRS levy my Social Security benefits?
A: The IRS has limited ability to levy certain federal benefits; however, other federal offsets and collection programs can affect refunds and benefits. Speak to a professional about specific benefit protections.

Sources and further reading

Professional disclaimer

This article is for educational purposes and does not constitute tax, legal, or financial advice. Your situation may differ — consult a qualified tax professional or an attorney for advice tailored to your circumstances. If you need representation before the IRS, consider signing Form 2848 (Power of Attorney) so a tax pro can act on your behalf.