An IRS CP504B is a notice of intent to levy issued by the Internal Revenue Service (IRS) to a taxpayer who has unpaid tax debts. The notice informs the taxpayer that the IRS intends to take hold of their property or assets to satisfy the unpaid tax debt unless the taxpayer takes immediate action to resolve the debt. Here are some key points to know about the IRS CP504B:
What Triggers an IRS CP504B Notice?
An IRS CP504B notice is triggered when a taxpayer has unpaid tax debts that have been outstanding for an extended period of time. The IRS will typically issue a CP504B notice after multiple attempts to contact the taxpayer have been unsuccessful and after the taxpayer has failed to respond to previous notices or requests for payment.
What Information Is Included in an IRS CP504B Notice?
An IRS CP504B notice will include the following information:
- The amount of the unpaid tax debt, including any penalties and interest
- A statement of the taxpayer’s rights and obligations under the law
- The consequences of not resolving the tax debt, including the potential for the IRS to seize the taxpayer’s property or assets
- Information on how to resolve the tax debt, including options for payment plans, offers in compromise, or other arrangements
What Are the Consequences of Ignoring an IRS CP504B Notice?
If a taxpayer ignores an IRS CP504B notice and fails to take immediate action to resolve their tax debt, the consequences can be severe. The IRS may take steps to seize the taxpayer’s property or assets, including bank accounts, wages, retirement accounts, and real estate. The IRS can also file a lien against the taxpayer’s property, which can make it difficult for the taxpayer to obtain credit or sell their property in the future.
What Can Taxpayers Do to Resolve an IRS CP504B Notice?
If a taxpayer receives an IRS CP504B notice, it’s important to take immediate action to resolve the tax debt. The following options may be available:
- Payment Plan: A payment plan allows the taxpayer to pay the tax debt over time in monthly installments. The IRS may require financial information from the taxpayer to determine the amount of the payment plan.
- Offer in Compromise: A taxpayer may settle their tax liability for less than the whole amount owed by making an offer in compromise. While assessing an offer in compromise, the IRS will take into account the taxpayer’s financial situation, income, outgoings, and assets.
- Currently Not Collectible Status: If the taxpayer is unable to pay the tax debt due to financial hardship, the IRS may grant currently not collectible status, which temporarily suspends collection activities.
How Can Taxpayers Appeal an IRS CP504B Notice?
A taxpayer has the right to challenge an IRS CP504B notice if they disagree with it. Within 30 days of the date on the notice, the appeal must be submitted in writing. The taxpayer should explain why they disagree with the notice and provide any supporting documentation. The appeal will be reviewed by an IRS appeals officer, who may request additional information or schedule a conference with the taxpayer.
How Can Taxpayers Prevent an IRS CP504B Notice?
The best way to prevent an IRS CP504B notice is to file tax returns on time and pay any taxes owed in full and on time. If a taxpayer is unable to pay their tax debt in full, they should contact the IRS as soon as possible to discuss payment options. Taxpayers should also keep accurate records of their income, expenses, and deductions and respond promptly to any notices or requests for information from the IRS.
How Long Does an IRS CP504B Notice Stay in Effect?
An IRS CP504B notice stays in effect until the tax debt is resolved, either by payment in full, a payment plan, an offer in compromise, or another arrangement. If the taxpayer fails to resolve the tax debt, the IRS may take steps to seize their property or assets.
Can Taxpayers Challenge the Validity of an IRS CP504B Notice?
If a taxpayer thinks an IRS CP504B notice is untrue or inaccurate, they can contest its legitimacy. Within 30 days of the date of the notice, the taxpayer must submit a request for a Collection Due Process (CDP) hearing. The taxpayer may offer proof and justifications to refute the notice’s validity at the CDP hearing.
What Happens If a Taxpayer Can’t Afford to Pay Their Tax Debt?
Depending on their financial situation, a taxpayer who is unable to pay their tax debt may be eligible for a payment plan, currently not collectible status, or an offer in compromise. When assessing these options, the IRS will take into account the taxpayer’s income, expenses, assets, and other elements.
Can a Taxpayer Be Criminally Prosecuted for Unpaid Tax Debts?
In some cases, a taxpayer who fails to pay their tax debt can be criminally prosecuted. However, criminal prosecution is rare and usually only occurs in cases where the taxpayer has engaged in deliberate tax evasion or fraud. Most taxpayers who have unpaid tax debts will not face criminal charges, but they may face civil penalties and collection actions by the IRS.
An IRS CP504B notice is a serious matter that should not be ignored. Taxpayers who receive a CP504B notice should take immediate action to resolve their tax debt, either by making payment arrangements or by exploring other options like an offer in compromise or currently not collectible status. It’s also important to respond promptly to any notices or requests for information from the IRS and to keep accurate records of income, expenses, and deductions. By taking these steps, taxpayers can prevent an IRS CP504B notice and avoid the potential consequences of unpaid tax debts.