Government officials often refer to a Notice CP504 as the final notice. This is often the letter the Internal Revenue Service (IRS) sends a taxpayer before it plans to move forward with collection efforts. It generally includes the following information:
- Your bill. It should include a clear statement of how much the IRS believes you owe.
- An explanation. In some cases, this bill may include additional penalties and fees. This letter should include an explanation where the IRS breaks down any fees or penalties that are added to the initial tax bill, so you know exactly what you are paying for when you pay the amount on the notice.
- Due date. The notice will also include a due date. If you do not get payment or another process before this due date, you could find yourself facing additional penalties and fees.
A failure to respond can result in the IRS moving forward with collection efforts. In many cases, the IRS can move forward with a levy, or taking, of any state tax refund if you do not pay the bill within 30 days of the date on the notice. They can also put a levy on property and even go after your wages, taking a portion directly out of your paycheck.
What if I cannot afford my tax bill?
First, it is important to take the matter seriously. The tax debt will not go away. The IRS will not forget about your bill and move on to other things. Thankfully, there are options to help you manage a large tax bill.
Paying the bill in full is generally not the only option.
The IRS offers online payment plans, such as an installment agreement, and other options to help you come into compliance with your tax obligations. It is a good idea to take the pros and cons of each option into consideration before making your choice.