This notice can be a bit misleading. The top of the actual notices says:
"Intent to seize your property or rights to property. Amount due immediately: $XX,XXX."
This can feel very scary. The title does not mention something the fine print specifies – this notice is specific to seizing your state income tax refund. The fine print says:
"As we notified you before, our records show you have unpaid taxes for the tax year ending 20XX. If you don't call us immediately or pay the amount due by (date), we may seize ('levy') any state tax refund to which you're entitled to and apply it to the $XX,XXX you owe. If you still have an outstanding balance after we seize any state tax refund, we may take possession of your other property or your rights to property."
Basically, the IRS will go after your state refund first. If then, you still have an outstanding balance, they can go after your other assets. You will get a separate IRS Notice if it gets to that point.
What you should do
- Read the notice carefully — it explains your due date, amount due, and payment options.
- If you can, make your payment by your due date.
- If you can't afford to pay, investigate if an "tax amnesty" program applies.
What exactly is the notice telling me?
This notice is telling you that the IRS intends to issue a levy against your state tax refund because you still have a balance due on one of your tax accounts. They say that you must pay this amount immediately to avoid this. It is also telling you that they will begin searching for other assets on which to issue a levy. They may also file a Federal Tax Lien, if they have not already done so.
This notice also explains the denial or revocation of a United States Passport. This is a new law stating that if you are a "seriously delinquent taypayer", your US passport may be revoked or denied. Learn more about the details of that law here.
How much time do I have?
You must pay your balance due by the due date shown on your notice. Even if you can't afford to pay, ensure you reach out to the IRS before that date to see if you can set up alternate payment arrangements.
So, what happens if I don't pay or contact the IRS?
If you don't pay the amount due, then the IRS may seize ("levy") any state tax refund to which you're entitled.
If you still have an outstanding balance after they seize your state tax refund, they may send you a notice giving you a right to a hearing before the IRS Office of Appeals, if you have not already received such a notice. This is done with something like a Notice LT11 or any other type of Final Notice of Intent to Levy.
If you fail to respond to that notice, the IRS may then seize or take possession of your other property or your rights to property. Property includes:
- Wages, real estate commissions, and other income
- Bank accounts
- Business assets
- Personal assets (including your car and home)
- Social Security benefits
The IRS may also file a Federal Notice of Tax Lien. If the lien is in place, you may find it difficult to sell or borrow against your property. The tax lien would also appear on your credit report ― which may harm your credit rating ― and your creditors would also be publicly notified that the IRS has priority to seize your property.
What if I do't agree or have already taken corrective action?
You could hire a tax representative to help you. Or, if you do not agree with this notice, contact the IRS immediately at the number printed at the top of the notice. If you have already paid this liability or arranged to pay it with an installment agreement, you should still call them to make sure your account reflects this.
The IRS states that "one of our customer service reps will assist you". I'm not sure how I feel about being called a "customer" of the IRS…
If you received a CP504 and are unsure how to proceed, contact us or watch out video below. There is help. Call us at 888-727-8796 or email firstname.lastname@example.org.