IRS Notice CP504B
The IRS May Seize Assets, What to Do
What Is the IRS Notice CP504B?
Getting any kind of IRS notice in the mail is stressful. Everyone has tax obligations each year, and failing to comply with the law can lead to penalties, interest charges, asset seizure, and even legal trouble. You always want to avoid unpaid taxes or unfiled tax returns.
If your business receives an IRS Notice CP504B, you need to act fast to avoid the IRS seizing your property, which could be income or physical property. What should you do if you receive a Notice CP504 of any kind?
This guide talks about the purpose of IRS CP504 notices and digs into how IRS Notice CP504B, Notice of Intent to Seize Your Property or Rights to Property, is different and what it means to get this notice in the mail.
What Is a CP504 Notice?
The IRS sends out CP504 notices when you haven’t paid your tax balance. They’re often referred to as a “final notice.” This notice lets you know that the IRS now is issuing an intent to levy under the IRS code. If you fail to pay what the notice says immediately, the IRS has the right to levy your property, including:
- Bank accounts
- Wages and income
- State income tax refund
- Property, such as real estate
However, if you pay what you owe as soon as you receive the notice, the IRS will likely not seize your property. This is why it’s so important to act right away if you receive an IRS CP504 notice, or any kind of IRS letter.
If you can’t afford to pay in full
You also have another option: setting up a payment plan. If you’re unable to pay what you owe when you receive IRS Notice CP504, you can contact the IRS to set up a plan to make payments in installments until your balance is paid off. Then, the IRS will consider your account in good standing and won’t try to collect if you follow the terms of the installment agreement.
If you disagree with the notice
Another option is disputing the notice. If you don’t agree with the information on the IRS CP504, use the contact information on the notice to get in touch with the IRS immediately. Make sure you talk through this situation with a tax expert if you’re thinking of pursuing a dispute.
How CP504B Differs from Other CP504 Notices
IRS Notice CP504B is the same type of document as CP504, but it’s specifically for businesses, not individuals. CP504B informs businesses, including corporations and partnerships, about the IRS’s intent to levy.
When you receive this notice, the IRS has likely already sent you notices regarding your business’s overdue tax balance. The CP504B Notice notifies you of the IRS’s intent to seize property, which could impact your business income or physical property.
When the IRS issues this notice to your business, keep in mind that they could then file a Notice of Federal Tax Lien, which further indicates their intent to levy property. A federal lien becomes public record, so anyone can see it, such as your creditors. You want to avoid these additional steps at all costs so you don’t put your business in deeper water with the IRS.
Notices Received Prior to CP504B
Usually, the IRS will send you IRS CP14 Notice or another notice with your amount due before you receive IRS CP504B. You may also receive IRS penalty notices, but a civpen form usually just outlines the penalties and interest you owe because of a late payment or unpaid balance.
While some initial notices aren’t extremely urgent, they lead to growing penalties and interest on your account and can eventually lead to asset liens and levies. Never ignore IRS notices or letters of any kind you receive in the mail.
Receiving a CP504B Notice can feel threatening, since the IRS is essentially informing you of the government’s intent to take your money or property from you to cover your tax debt. However, acting fast can help you ensure that doesn’t happen.
Remember that another wise way forward is talking through your situation with a tax attorney as soon as you receive an IRS notice.
How Is CP504B Notice Sent?
The IRS sends notices and letters via regular mail. This is the likely format you’ll receive IRS CP504B. You can also view digital versions of all of your IRS notices in your IRS Online Account when you log in.
If you are traveling for a long period of time or don’t have access to the mailbox at the address you used on your business tax return, make sure you come up with a plan to get that mail. You never want to risk missing a notice or letter that has a strict deadline for replying and compliance.
Steps to Take When You Receive IRS CP504B Notice
The first thing to do when you receive any kind of IRS notice: don’t panic. You may feel stress and anxiety when you fear you did something wrong, but most situations have clear steps to take to ensure you stay compliant.
Here’s what to do when you receive IRS Notice CP504B:
1. Act Immediately
Whatever you do, don’t ignore IRS Notice CP504B. You need to act immediately to avoid the IRS seizing your property. Make your response or action a top priority, and don’t put it off. Acting fast also helps you avoid additional penalties, fines, and legal trouble.
2. Follow the Provided Deadline
This type of notice usually has a 21-day deadline for your response or payment. If you don’t pay what you owe during this time, or set up a payment plan, the IRS may file a federal lien or seize your property. Remember that your failure to file penalty and interest charges may also increase if you don’t follow the deadline.
3. Follow Notice Instructions
Carefully read your entire notice. Follow instructions exactly as they’re outlined for paying your unpaid balance or contacting the IRS if there’s a problem. There should be a phone number you can use for the IRS on the notice.
4. Review Your Tax Return
It never hurts to look back through your tax records in question, especially if you suspect an error. Review all information in the notice carefully, and compare it against your tax return for the applicable year. Note any discrepancies or issues, and bring them to a tax expert.
5. Pay the Unpaid Balance
If you can, pay your entire balance immediately. Follow the instructions on the notice for making this payment. This is the best way to avoid trouble with the IRS and get your business back in good standing.
6. Create an Installment Agreement
The IRS allows taxpayers to set up a payment plan, or installment agreement, if you can’t pay off your full balance right now. Apply for a payment plan as soon as you receive IRS CP504B notice to come to an arrangement with the IRS to pay off your debt over time.
7. Pay Attention to Penalties and Interest
Your CP504B Notice will also include any penalties or interest that has accrued because of your late payment. The failure to file and failure to pay penalties are common. Don’t ignore those amounts when sending your payment, and remember that they will continue to build the longer you fail to pay.
8. Dispute the Notice if you Don’t Agree
The IRS will outline steps to take to appeal or dispute a notice you don’t agree with. Follow these instructions carefully to contact the IRS and submit information that provides proof against what the notice requests.
9. Maintain Strong Tax Records
Create an organized system for keeping tax records, including your annual tax returns, IRS notices you receive, and information about your business’s expenses and income.
10. Contact a Tax Professional
As soon as you receive an IRS notice, it’s in your best interest to talk to an expert. Get in touch with a tax attorney who can explain what’s going on and help you navigate the right move forward. You never want to risk additional penalties or interest, and you want to do everything you can to avoid property seizure by the IRS.
Why Work with a Tax Attorney for IRS Notices?
Receiving IRS Notice CP504B is not fun. But if you’ve stayed compliant with your taxes and are able to pay your unpaid balance, you can avoid property seizure. You also have other options to work out your debt with the IRS, including offers in compromise or a temporary stop to collections until you can afford to pay.
Whatever your situation is, talk to a tax attorney as soon as you receive a CP504B for your business. Doing so helps you avoid risking any tax issues and having your property seized, which could impact the future success of the organization you’ve worked hard to build.
Talk to the team at the W Tax Group. Our experienced attorneys understand tax law, which always seems to be changing. We’ll help you break down your tax situation and find the best way to move forward so you avoid further penalties and get your business back in good standing with the IRS.
