A CP504 is the IRS putting in writing that it intends to levy. It arrives after earlier balance-due notices have gone unpaid, and it is the notice the IRS relies on to meet the 30-day advance-notice requirement of Internal Revenue Code §6331(d). It is serious. It is also widely misunderstood: it is not the last notice before most levies, and it does not carry Collection Due Process hearing rights. Here is what a CP504 actually does, and how Tax Debt Relief Group works a CP504 case for the clients who hire us.
What the CP504 Notice Is
The IRS describes the CP504 as your Notice of Intent to Levy under IRC §6331(d). That statute allows a levy on salary, wages or other property only after the IRS has notified the taxpayer in writing of its intention to levy, no less than 30 days before the levy. The Internal Revenue Manual confirms that the CP504 is the §6331(d) notice (IRM 5.11.1.5.4).
The notice also warns that the IRS can file a Notice of Federal Tax Lien if it has not already done so, and that it will begin searching for other assets it could levy.
What the CP504 Is Not: The Notice That Carries Hearing Rights
A lot of material online calls the CP504 the “final notice” and says it opens a 30-day window to request a Collection Due Process (CDP) hearing. That is not accurate. The IRM lists the Notice of Intent to Levy and the Notice of a Right to a CDP Hearing as separate required notices (IRM 5.11.1.3.2). The CDP notice comes from a different statute, IRC §6330, which bars most levies until the IRS has notified the taxpayer in writing of the right to a hearing, at least 30 days before the first levy for that tax period. The IRS usually sends that notice as Letter LT11 or Letter 1058 (IRM 5.11.1.3.3.1).
So a CP504 on its own does not start your CDP clock. That matters, because the CDP hearing is where some of the strongest collection protections sit, and its deadline runs from a later letter.
What the IRS Can Do After a CP504
There is an important exception to the hearing-first rule. Under IRC §6330(f)(2), when the IRS serves a levy on a state to collect from a state tax refund, the hearing is offered after the levy rather than before it. That is why the CP504 specifically warns about your state income tax refund.
According to the IRS’s own explanation of the CP504, if a balance remains after a state refund levy, the IRS may send a notice of your right to a hearing before the Independent Office of Appeals, if you have not already received one, and can then levy other property, including wages, bank accounts, business assets, personal assets and Social Security benefits. A levy on wages is continuous: under IRC §6331(e) it stays in effect from the date it is first made until it is released.
Two Myths About Protecting Assets
“Retirement accounts are safe from the IRS.” Not by law. IRC §6334(a) lists the specific property that is exempt from IRS levy, and IRAs and 401(k) plans are not on that list. IRC §6334(c) states that no other property is exempt, notwithstanding any other law of the United States. Protections that apply against ordinary creditors do not control a federal tax levy.
“Moving assets into a trust will protect them.” We do not recommend or arrange asset transfers to get around a tax debt. An IRS levy reaches all property and rights to property belonging to the taxpayer, except what §6334 exempts (IRC §6331(a)). Moving property does not reduce the liability, and transfers made to put property out of the IRS’s reach can create serious problems of their own.
What the Code Says Stops or Prevents a Levy
The protections that actually work are written into the Internal Revenue Code, and they are the tools we use:
- Installment agreement. IRC §6331(k)(2) bars levy while a proposed installment agreement under §6159 is pending, for 30 days after a rejection (longer if the rejection is appealed), and while the agreement is in effect. See our IRS payment plan and installment agreement page.
- Offer in compromise. IRC §6331(k)(1) bars levy while an offer in compromise under §7122 is pending, and for 30 days after a rejection, plus the time any appeal of that rejection is pending. See our offer in compromise page.
- Economic hardship. IRC §6343(a)(1)(D) requires the IRS to release a levy once it has determined that the levy is creating an economic hardship due to the taxpayer’s financial condition. If hardship is the real issue, see our page on currently not collectible status.
- Collection Appeals Program (CAP). The IRS’s CP504 guidance says a CAP appeal can be requested before collection action takes place. Under IRM 8.24.1.3, CAP covers a levy that has been or will be taken and a lien that has been or will be filed.
How Tax Debt Relief Group Works a CP504 Case
When a client hires us after a CP504, the work follows the same order every time:
- Authorization. Peter Kici, EA, files a power of attorney so that we, not you, deal with the IRS from that point on.
- Transcripts. We pull your IRS account transcripts to confirm what is actually assessed, which periods carry a balance and whether any returns are missing. The notice shows one balance; the transcripts show the whole account.
- Timeline. We establish where each tax period stands: CP504 only, or a CDP notice already issued, and which deadlines apply.
- Financial picture. We document income, expenses and assets so that the resolution we propose fits what you can actually pay.
- Resolution. We put forward the option your facts support, whether that is an installment agreement, an offer in compromise, hardship status or a CAP or CDP appeal, and we handle the IRS side of it.
No practitioner can promise a particular result; the IRS makes the final decision. What we do is make sure the right request is in front of the IRS, on time and supported by the numbers.
Frequently Asked Questions
Is the CP504 the last notice before the IRS levies my wages or bank account?
Usually not. Apart from state tax refunds and the other exceptions listed in IRC §6330(f), the IRS must first send a Notice of a Right to a Collection Due Process Hearing under IRC §6330, at least 30 days before the first levy. The CP504 warns that levy is coming; the CDP notice is the step before most levies.
Can the IRS take my state tax refund after a CP504?
Yes. A levy on a state tax refund is one of the exceptions in IRC §6330(f)(2), so the hearing is offered after that levy instead of before it.
Will a CP504 affect my credit?
The CP504 warns that the IRS can file a Notice of Federal Tax Lien. The IRS describes a lien as a public notice to your creditors that can affect your ability to get credit.
Does paying part of the balance stop the process?
A partial payment reduces what you owe, but the IRS may levy for any tax that remains unpaid (IRC §6331(a)). What the Code recognizes as stopping a levy is a pending or active installment agreement or offer in compromise (IRC §6331(k)), a release for economic hardship (IRC §6343(a)(1)(D)), or payment in full.
Is my 401(k) or IRA protected from an IRS levy?
Not by statute. Neither is on the IRC §6334(a) list of exempt property, and IRC §6334(c) says no other property is exempt.
Received a CP504? Let Us Take It From Here
If a CP504 is sitting on your kitchen table, the most useful thing you can do is have a practitioner look at the account before the next letter arrives. Tax Debt Relief Group is led by Peter Kici, an Enrolled Agent who represents taxpayers before the IRS. Book a free consultation, read how we handle IRS levy and bank levy cases, or download our free book.