If you are behind on paying taxes, you may be overwhelmed by the notices and letters that the Internal Revenue Service (IRS) has been sending. But it's important to understand what each notice means. They aren't all the same, and each notice comes with a specific set of requirements on how to best respond.

WHAT IS A CP504 “URGENT NOTICE”?

A “CP504 Notice” is a warning the IRS hasn't received your payment for an outstanding balance. The CP504 notice will inform you of the amount owed and tell you the date the payment is due.

The notice will state that the IRS intends to levy (i.e., take) your wages, bank accounts, and a state tax refund in order to pay the outstanding balance. The notice will also explain that the IRS will start looking for other assets (such as your car or your home) to take to satisfy the debt, and the IRS will notify creditors it is placing a lien on your assets. 

Additionally, the notice may state if your unpaid taxes are the reason why your passport has been revoked.

WHAT TO DO WHEN YOU'VE RECEIVED A CP504 NOTICE

If you have received a CP504, do not ignore it. The point of the notice is to allow you to resolve your debt before the IRS has taken any action. And there are steps to take, even if you are unable to pay the entire amount: You may be able to work out a payment plan or negotiate the amount owed. You can also dispute the amount.

RESPONDING IMMEDIATELY IS IMPORTANT

While the notice will say that the payment should be made immediately, you will often have 21 or 30 days after the date of the notice (not when you received it) to either pay the amount in full or contact the IRS to make those other arrangements.

But you shouldn't wait: Reach out to a qualified tax lawyer as quickly as possible. You want to give your lawyer time to review your filings and the issues, but you also want them to have the time to contact the IRS and stop the IRS from taking any immediate action against you.

The sooner you have qualified legal counsel, the faster you can resolve the issue and move on with your life.

If you have received a CP504 or any other notification from the IRS, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.