Receiving a CP504 notice means the IRS is taking serious steps to collect your unpaid tax debt. This notice warns that the IRS plans to take your assets, like wages, bank accounts, and state tax refunds if you don’t act quickly. At Ronald Arthur Stearns Sr. PLLC, we know how urgent and stressful this can be. Our team is here to help you handle this situation effectively, ensuring your rights are protected and your finances are prioritized.
Don’t let a CP504 notice put your financial future at risk. Contact Ronald Arthur Stearns Sr. PLLC today at 1-512-257-0570 for a consultation. Our experienced tax attorneys are ready to offer solutions tailored to your situation, helping you resolve your tax issues and protect your assets. Take control of your tax problems now with our guidance.
What is an IRS CP504 Notice?
An IRS CP504 notice tells you about your unpaid tax debt and possible actions the IRS might take if you don’t pay. It’s a final warning before the IRS takes more serious steps to collect what you owe. This notice is usually sent via certified mail to make sure you receive it.
Getting a CP504 notice means the IRS plans to take your assets, like wages, bank accounts, and personal property if you don’t pay soon. Ignoring it could lead to big financial problems, including losing state tax refunds and facing federal tax liens.
The notice explains how much you owe, including any interest and penalties, and gives instructions on how to pay or dispute the amount. The IRS sends a CP504 notice when earlier attempts to collect the debt, like CP501 and CP503 notices, haven’t worked. CP501 is the initial notice sent to inform you about the outstanding tax balance and requests immediate payment, while CP503 serves as a reminder that the tax debt remains unpaid and urges prompt action to avoid further collection efforts. So, the CP504 notice is the IRS’s last try to collect the debt before taking more drastic measures.
Why Did You Receive a CP504 Notice?
The main reason you are receiving the CP504 notice is not paying or responding to previous notices about your tax debt. Common reasons for getting a CP504 notice include missed payments or ignored previous notices. Sometimes, taxpayers might not have received earlier notices due to address changes or postal errors or might have thought the IRS’s calculation was wrong. In such cases, quickly clarifying the situation with the IRS prevents further escalation.
If you recently made a payment, the notice might have been sent before the payment was processed. Whatever the reason, dealing with the notice quickly avoids more serious collection actions.
Consequences of Ignoring a CP504 Notice
Ignoring a CP504 notice can lead to severe consequences that greatly affect your finances. One immediate consequence of ignoring a CP504 notice is the IRS taking personal assets, including income and bank accounts. They can also file a federal tax lien, which affects property rights and damages credit scores. This lien makes it hard to sell or refinance your property and can follow you for years.
Another consequence is risking the ability to get or renew a U.S. passport. The IRS can label tax debt as “seriously delinquent,” causing the State Department to deny passport applications or renewals. Additionally, accumulating penalties and interest charges on the unpaid balance will worsen the financial situation.
Ignoring the CP504 notice means losing the chance to appeal the IRS’s decision before collection actions start. Addressing the notice quickly can prevent these severe consequences and offer options to manage tax debt more effectively.
3 Steps to Take After Receiving a CP504 Notice
After getting a CP504 notice, taking immediate and informed action is key to avoiding further issues. You have 30 days to respond and pay the owed balance or take corrective action to stop the IRS from starting collection actions.
Consulting a tax attorney from Ronald Arthur Stearns Sr. PLLC can help you through this process and develop a strategic response.
1. Verify the Accuracy of Your CP504 Notice
The first step is to check the accuracy of the CP504 notice. Mistakes can happen, so make sure the amount stated is correct. Double-check for any errors and contact the IRS immediately if there are discrepancies.
At Ronald Arthur Stearns Sr. PLLC, our tax attorneys are highly skilled in verifying the accuracy of your CP504 notice. We meticulously review IRS account transcripts to ensure the amount stated is correct. Often, a CP504 notice might be issued before the IRS processes a recent payment, leading to confusion and incorrect balances regarding your tax account. We identify and rectify such discrepancies, providing you with clarity and peace of mind.
2. Payment Options for Settling Your Tax Debt
Several payment options are available for taxpayers facing a CP504 notice. Immediate payment is the most straightforward and can be done online or by mailing a check. If the amount owed is substantial and immediate payment isn’t feasible, a payment plan might be a better option.
One common method is to request an installment agreement, allowing tax debt to be paid over time through manageable monthly payment arrangements. Different types of installment agreements, including partial-payment installment agreements, permit payment of a portion of the debt over time according to financial situations.
Another option is an offer in compromise (OIC), which allows you to settle your tax debt for less than the total amount owed. While this option has strict eligibility requirements and requires a thorough financial assessment, Ronald Arthur Stearns Sr. PLLC can assist you through the OIC process. Our experienced tax attorneys will conduct a comprehensive evaluation of your financial situation to determine your eligibility and prepare a compelling OIC application. By working closely with the IRS, we negotiate on your behalf to potentially reduce your financial burden, ensuring the offer is presented effectively and increasing the likelihood of acceptance.
3. What To Do If You Cannot Pay the Full Amount
If you cannot pay the full amount owed on a CP504 notice, several alternatives can help manage tax debt. For those in severe financial hardship, applying for Currently Not Collectible (CNC) status might be an option. To qualify, proof of the financial situation must be provided, demonstrating that paying taxes would prevent covering basic living expenses. When granted CNC status, all IRS collection activities are halted for a specified period. Taking proactive measures by contacting the IRS allows for arranging alternative payment options and prevents further penalties.
Disputing a CP504 Notice
Disputing a CP504 notice requires a formal process. A Collection Due Process Hearing can be requested if the IRS’s claims are believed incorrect. Filing a written protest and documenting all communications with the IRS is needed to build a case.
Legal counsel from Ronald Arthur Stearns Sr. PLLC can assist in filing appeals, providing proof of payments, and challenging incorrect assessments. We guide you through the appeals process, ensuring your rights are protected and your case is presented effectively and work towards a favorable resolution.
Steps to Dispute a CP504 Notice
- Review the Notice Thoroughly: Begin by carefully reading the CP504 notice to understand the IRS’s claims. Ensure that all details, such as the amount owed and the tax years in question, are accurate.
- Gather Supporting Documentation: Collect all relevant documents, such as tax returns, payment receipts, and any correspondence with the IRS. This evidence will support your case and demonstrate any discrepancies.
- Request a Collection Due Process Hearing: If you believe the IRS’s claims are incorrect, you have the right to request a Collection Due Process Hearing. This must be done within 30 days of receiving the notice to prevent further collection actions.
- File a Written Protest: Prepare a written protest detailing why you disagree with the IRS’s assessment. Clearly outline your arguments and include any supporting documentation.
- Seek Professional Assistance: Engaging a tax attorney or a professional with experience in IRS disputes can be invaluable. They can help you navigate the legal process, file the necessary paperwork, and represent you during hearings.
- Communicate with the IRS: Keep open lines of communication with the IRS throughout the dispute process. Respond promptly to any requests for additional information and keep detailed records of all interactions.
- Prepare for the Hearing: If a hearing is granted, prepare thoroughly by reviewing your case and organizing your documentation. Your legal counsel can help ensure that your arguments are clearly presented.
- Explore Alternative Resolutions: If the dispute cannot be resolved through a hearing, consider other options such as negotiating a settlement or exploring payment plans that align with your financial situation.
Disputing a CP504 notice is a complex process that requires careful preparation and a strategic approach. By taking these steps and seeking professional assistance, you can effectively challenge the IRS’s claims and protect your financial interests.
How Ronald Arthur Stearns Sr. PLLC Can Help You
Ronald Arthur Stearns Sr. PLLC offers comprehensive legal support for taxpayers dealing with CP504 notices and other IRS issues. With over two decades of experience, Ronald Arthur Stearns has been defending Texans and their businesses against the IRS since 1996.
Ronald Arthur Stearns Sr. can represent you, challenge incorrect assessments, and negotiate to reduce your tax bill. We provide personalized service, with Ronald Arthur Stearns personally handling every case to ensure the best possible outcome for our clients. Our firm understands the intricacies of tax law and the IRS collection process, making us well-equipped to handle even the most complex tax problems.
Comprehensive Services Offered
- Free Telephone Consultation: We offer a complimentary telephone consultation to discuss your situation and determine the best course of action. During this call, we evaluate your financial situation, unpaid taxes, and any potential errors in your tax account.
- Tailored Strategies: This initial meeting allows us to create a tailored strategy to address your tax debt effectively and efficiently.
- Negotiation Assistance: We assist in negotiating installment agreements or offers in compromise to make your tax debt more manageable.
- Financial Hardship Support: If you’re facing severe financial hardship, we can help you apply for Currently Not Collectible status, halting collection efforts temporarily.
- Guidance Through Hearings: Our team can guide you through the collection due process hearings, ensuring your rights are upheld and your case is presented effectively.
Take Control of Your Tax Situation Today
Don’t wait for the IRS to take further action. Contact Ronald Arthur Stearns Sr. PLLC at 1-512-257-0570 for a consultation to discuss your CP504 notice and explore your options. Our experienced tax attorneys are ready to help you navigate the IRS collection process, protect your assets, and resolve your tax problems. Take the first step towards financial peace of mind today.