Have you been told your account is in jeopardy of lien or levy? That means, the IRS is ready to act. This usually happens for one of two reasons: you owe back taxes or you have stopped responding. At this point, the IRS assumes that delaying payments could reduce their chances of collecting the debt, so they prepare to seize assets. Before this costs you an arm and a leg, you must consider your best options. That is why this guide exists to help you take the right steps.
What Is a CP504 Notice, And Why You Got One
By the time you receive a CP504, the IRS has already tried to contact you through earlier notices like CP14 or CP501, so this letter signals serious intent.
However, the CP504 is not the final notice before a levy, but it is your last major shot to fix the issue before aggressive action. If you ignore it, the next letter could be a formal Notice of Intent to Levy, and by then, your options are fewer and the consequences more severe.
Lien vs. Levy: What is the IRS Planning to Do?
When the IRS says your account is in jeopardy, two major tools are on the table: a lien or a levy. They sound similar, but they work very differently.
A tax lien is a legal claim against your property. It does not take anything yet, but it attaches to assets like your home, car, or business. It can hurt your credit and make it hard to sell or refinance. The IRS can file federal tax liens, and states can issue state tax liens, too.
A levy is more aggressive. It means the IRS is actually taking your assets by seizing money from your bank account, garnishing wages, or claiming property. It is not a warning; it is action.
In rare cases, the IRS can issue a jeopardy levy, which skips the usual notice process if they believe waiting would let you hide or move assets. This is uncommon, but it happens in high-risk cases.
Both are serious, but a levy is faster and more disruptive.
Common IRS Notices That Point to a Jeopardy of Tax Lien or Levy
If your account is at risk, the IRS usually does not directly seize your assets. Instead, they follow a series of escalating notices:
CP14 – Balance Due
This is the IRS’s first reminder that you owe taxes. It is not a threat, but if you ignore it, you are opening the door to collection action.
CP503 – Second Reminder
A follow-up notice that tells you the balance is still unpaid. That is, your account is getting closer to lien or levy territory. At this point, the IRS expects you to pay or reach out.
CP504 – Final Notice Before State Refund Levy
Now things are getting serious. The IRS warns that it may take your state tax refund to cover the debt. It’s also a sign they might file a federal tax lien next if no action is taken.
LT11 / Letter 1058 – Final Notice of Intent to Levy
This is the IRS’s last warning before it seizes assets like wages or bank accounts. You still have the right to request a Collection Due Process (CDP) hearing, but you must file Form 12153 within 30 days.
CP90 – Final Notice Targeting Specific Assets
Similar to LT11, but often focused on things like Social Security benefits. You also have 30 days to request a hearing or resolve the debt before the levy begins.
What Happens If You Ignore the CP504?
Ignoring the CP504 notice pushes your case further into enforcement. You may lose important legal rights, such as the ability to appeal or negotiate payment terms.
The IRS will likely send a Notice of Intent to Levy (Form LT11 or Letter 1058), which gives them legal authority to seize your wages, bank accounts, or property after 30 days.
Normally, the IRS has 10 years to collect a tax debt. But that timeline can be extended if you delay, miss deadlines, or file certain forms. In some cases, the collection period may be extended or restarted in certain legal scenarios.
In a nutshell, waiting makes things worse. The sooner you respond, the more control you keep.
How to Respond Immediately
Follow the steps below to understand where you stand and how to protect yourself.
Step 1 → Check your balance: Log into your IRS account or call the IRS to confirm how much you owe and what notices have been sent. Make sure your contact information is up-to-date.
Step 2 → Know your rights: You may have the right to appeal collection actions or request relief if payment would cause serious financial hardship. The IRS must follow due process, but if you do not respond on time, you could lose these rights.
Step 3 → Review your options: Choose a solution based on your financial situation.
- Installment Agreement: Pay the balance over time
- Currently Not Collectible: Pause collection if you are unable to pay
- Offer in Compromise: Settle for less if you qualify based on income, assets, and expenses
Step 4 → Get professional help: If your balance is large or the IRS has already taken steps to levy, speak with a licensed tax professional. An expert can help you respond correctly, avoid missteps, and negotiate better terms.
Prevent Future Liens or Levies
Once you resolve your current tax issue, the next goal is to stay compliant. This is the best way to avoid future liens, levies, or other IRS enforcement actions.
File on Time, Even If You Cannot Pay
The IRS charges penalties for both late filing and late payment. But the penalty for not filing at all is much higher. By submitting your return on time, even if you cannot pay the full amount, you can reduce extra charges and show that you are making an effort.
Pay What You Can, When You Can
Even partial payments help to lower interest and penalties. It also shows the IRS that you are cooperating, which can reduce the chance of them taking aggressive action later.
Use IRS Programs to Stay on Track
The IRS offers several programs to help you stay current:
- Payment Plans allow you to pay your balance in smaller, monthly amounts.
- Direct Debit options help prevent missed payments.
- Penalty Relief may apply if you’ve filed on time in the past or have a valid reason for falling behind.
Small, timely actions today can protect your income, assets, and peace of mind tomorrow.
A CP504 notice is your sign to act right now. But the good news is, with the right steps, most tax problems can be resolved.
If you have received this notice or think you’re at risk, contact us today. Our team has helped over 79,000 taxpayers find real solutions. We offer a free consultation to review your case and guide your next move. Confidential, no pressure, and no obligation.
Frequently Asked Questions
If no action is taken, the IRS will likely send a Notice of Intent to Levy (Letter 1058 or LT11). This gives them legal authority to seize assets after 30 days.
Here are the collection letters the IRS mails to individuals:
- CP14 (Notice of unpaid taxes)
- CP501 (Reminder of unpaid taxes)
- CP503 (Second reminder of unpaid taxes)
- CP504 (Notice of Intent to Levy) May seize state tax refund by stated deadline
- Letter 1058 or LT11 and other letters (Final Notice. Notice of Intent to Levy and Notice of Rights to Appeal)
Check other IRS letter and notices you have received.
The IRS can issue a bank levy more than once. Each levy is a one-time action, but they can continue issuing new levies until the debt is paid or resolved.
A jeopardy levy allows the IRS to seize assets without sending the usual advance notice. It is used in rare cases where the IRS believes collection is at immediate risk.
You can call the IRS directly at 1-800-829-1040. However, if the situation is urgent or complex, it is best to consult a licensed tax professional.
A state tax lien is a legal claim filed by your state’s tax agency when you owe unpaid state taxes. It can affect your property and credit, similar to a federal lien.
The IRS can levy wages, bank accounts, Social Security payments, tax refunds, and even physical property like vehicles or real estate, depending on the debt amount.
Yes, you have the right to request a Collection Due Process hearing or submit a written appeal if you believe the levy was issued in error.
The IRS is required to send a final notice at least 30 days before a levy. The exception is a jeopardy levy, which bypasses this requirement.
