The pandemic had an impact on everything in our nation. Grocery stores closed and had difficulties keeping shelves stocked, offices and schools shifted to virtual offerings, even federal agencies like the Internal Revenue Service (IRS) cut back on operations. This, paired with a decrease in funding in past years, meant the IRS came back from the pandemic facing a massive backlog of filings.
Recent funding from the Inflation Reduction Act gave the IRS the means to hire on additional staff. This provided the workforce needed to help address the backlog of tax filings.
Did the IRS’ plan to address the backlog of filings work?
The agency recently reported that it was able to process all paper and electronic filings received before January of 2023. As such, taxpayers may start to get mailings from the agency — mailings that could include a Notice CP504.
What is Notice CP504?
This tax notice, also known as the Final Notice, includes the following information:
- Bill. It will state how much the taxpayer owes the IRS.
- Fees. There is also a section outlining any additional penalties or fees the agency added on to the tax bill. This could include things like a late fee.
- Deadline. The notice also includes a deadline. This is important. A failure to abide by the deadline can mean additional penalties and fees.
The deadline is generally set for 30 days. A failure to make payment within that timeframe can mean the IRS moves forward with a levy.
What is a levy?
A levy is a legal proceeding that allows the IRS to take possession of the taxpayer’s property to satisfy the debt. This could include any refund that the taxpayer could receive from their state taxes. The IRS could move forward with additional collection efforts and also levy other personal property like bank accounts, retirement accounts, business assets and even the taxpayer’s home.
What are my options if the IRS send me a Notice CP504?
You have two primary courses of action. First, those who disagree with the IRS’ findings can file an appeal. This is a legal action to challenge the IRS’ bill.
Next, those who cannot afford to pay the bill can consider different payment options. Some examples can include a payment plan or offer in compromise. Either can offer a more manageable way to repay the debt. The right choice will depend on the details of the case.