How to Stop an IRS State Tax Refund Levy and Federal Tax Lien After a CP504 Notice

Receiving a notice from the Internal Revenue Service (IRS) can be an intimidating experience. Among the various notices the IRS sends, the CP504 notice, formally titled "Notice of Intent to Levy," stands out as a critical communication that demands your immediate attention. This notice is not a mere suggestion; it is a final warning that the IRS is preparing to take enforced collection action against you. Understanding what this notice means, the legal authority behind it, and the options available to you is crucial to protecting your assets and resolving your tax liabilities. This material should help you navigate this challenging situation. 

What is an IRS CP504 Notice? 

The CP504 notice is a formal declaration from the IRS of its intent to levy your property to satisfy an unpaid tax liability. It is typically the culmination of a series of notices, following the initial bill (CP14) and subsequent reminders (CP501 and CP503). The CP504 serves as the final reminder before the IRS can legally seize your assets. The notice will specify the amount of tax you owe, including any penalties and interest that have accrued, and will inform you of the IRS’ intent to levy your state tax refund. It also warns that the IRS will begin searching for other assets to seize if the tax is not paid promptly. 

Consequences of Ignoring a CP504 Notice 

Ignoring a CP504 notice can have severe financial consequences. If you fail to respond within the 30-day period, the IRS can proceed with a levy, which is the legal seizure of your property to satisfy a tax liability. The IRS can levy a wide range of assets, including: 

•Wages and Salary: A portion of your wages can be garnished directly from your employer. 

•Bank Accounts: The IRS can seize funds directly from your checking and savings accounts. 

•State Tax Refunds: Your state tax refund can be intercepted and applied to your federal tax debt. 

•Personal and Business Assets: The IRS can seize and sell your personal property, such as your car and home, as well as business assets. 

•Social Security Benefits: A portion of your Social Security benefits can be levied. 

However, the IRS can only seize a state tax refund after a CP504. Different notices give them the power to seize the other listed items. 

In addition to a levy, the IRS may also file a Notice of Federal Tax Lien, a public claim to your property that can damage your credit and make it difficult to obtain loans or sell property.

Your Options After Receiving a CP504 Notice 

Upon receiving a CP504 notice, it is imperative to act quickly. You have several options to address your tax liability and prevent enforced collection actions: 

•Pay the Debt in Full: The most straightforward option is to pay the full amount of tax, penalties, and interest owed. 

•Installment Agreement: If you cannot pay the full amount immediately, you may be eligible for a payment plan, known as an installment agreement, which allows you to make monthly payments over an extended period. 

•Offer in Compromise (OIC): An OIC allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than what they originally owed.  

•Currently Not Collectible (CNC) Status: If you are unable to pay your basic living expenses and your taxes, the IRS may place your account in CNC status, which temporarily suspends collection efforts. 

Take Action Now 

We hope this article has provided you with a clear understanding of the IRS CP504 notice and your rights as a taxpayer. If you found this information helpful, please like and subscribe to our channel for more valuable content on navigating tax issues. 

To further assist you, we have created a free video, The Ultimate Guide to Solving Your IRS Tax Problems that walks you through how to deal with a wide range of IRS tax problems. Scan the QR code below or click the button to watch now! 

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Book a Consultation 

Dealing with the IRS can be complex and stressful. If you have received a CP504 notice or are facing other tax challenges, you don't have to go through it alone. We offer consultations to discuss your situation and explore your options. We can help you understand your rights, negotiate with the IRS, and find the best possible outcome for your case.

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