Getting an IRS letter is never pleasant. But if the notice you received is a CP504, it deserves special attention — especially if you live or work on Long Island and your finances depend on steady cash flow (commissions, small-business income, seasonal work, or multiple income streams).
A CP504 is one of the last “formal warning” notices the IRS sends before it can legally begin enforced collection actions. Many people in Nassau and Suffolk Counties ignore it because nothing changes immediately. That delay is exactly what makes CP504 so dangerous.
This guide explains what CP504 really means, what the IRS is likely to do next, and the most practical ways to protect your paycheck, your bank account, and your peace of mind.
What Is a CP504 Notice?
The IRS CP504 is commonly titled something like:
“Notice of Intent to Levy — State Tax Refund”
That wording trips people up. They think it only applies to a state refund. In reality, CP504 is a strong escalation. It signals that:
- The IRS believes prior notices were ignored or unsuccessful
- Your account is now eligible for enforced collection
- The IRS is preparing to seize money if the balance isn’t resolved
Yes, CP504 often references the IRS taking your state tax refund. But it also serves as a broader “you are running out of runway” notice.
Why CP504 Is More Serious Than the Letters Before It
Most taxpayers receive several IRS notices before CP504. Earlier letters are basically billing notices:
- “You owe a balance.”
- “You didn’t respond.”
- “We still need payment.”
CP504 is where the tone changes. It’s the point where the IRS starts transitioning from:
asking you to pay → to collecting whether you cooperate or not.
That’s why you can’t treat CP504 like spam mail.
How Much Time Do You Have?
Typically, CP504 gives you 30 days to respond.
Two things matter here:
- The IRS timeline is not flexible just because life is busy.
- If you miss the window, the IRS may move forward without sending you a “final-final” warning.
People on Long Island often assume: “If they were really going to do something, I’d hear about it again.” Sometimes you won’t — you’ll just see the result (frozen funds, garnished wages, or a lien impacting your credit).
What Can the IRS Do After CP504?
Once CP504 expires, the IRS can take steps that create immediate financial stress, including:
1) Levying a Bank Account
A bank levy is one of the most disruptive actions because it’s fast. The bank freezes available funds and can later release them to the IRS. If you rely on a single operating account (especially as a business owner), this can cascade into bounced payments, missed payroll, and late fees.
2) Garnishing Wages
The IRS can garnish wages without a court judgment. If you’re paid on commission (common in Long Island industries like real estate, sales, finance, and contracting), wage garnishment can hit hard.
3) Filing or Enforcing a Federal Tax Lien
A lien doesn’t take money immediately, but it attaches to property and can:
- Damage credit
- Complicate refinancing
- Affect home sale timing
- Create stress around real estate transactions
In Nassau and Suffolk, where property values are high and refinancing is common, liens create real-world friction.
4) Offsetting Refunds
CP504 specifically warns about taking your state tax refund, but refunds at both state and federal levels can be intercepted depending on your situation.
Why Long Island Taxpayers Often Wait Too Long
CP504 doesn’t always cause immediate consequences, so people delay. Common reasons include:
- “I’m going to handle it after the holidays / after tax season / after this contract closes.”
- “I’m waiting on my accountant.”
- “I don’t want to trigger an audit by calling.”
- “I can’t pay it anyway, so what’s the point?”
Here’s the reality: You don’t have to be able to pay in full to take action. Many legitimate solutions are designed specifically for people who can’t pay the balance immediately.
Practical Steps to Take Immediately After Receiving CP504
If you want a simple checklist, here’s what matters most:
Step 1: Confirm what years are involved
CP504 is often tied to one or more tax years. Make sure you know exactly which periods the IRS is collecting for — and whether unfiled returns are part of the problem.
Step 2: Don’t “set it aside” if you’ve missed earlier notices
If CP504 isn’t your first IRS letter, your margin for error is smaller. At this stage, ignoring it can trigger enforcement.
Step 3: Avoid making a rushed payment arrangement you can’t afford
A common mistake: taxpayers agree to a monthly payment just to “make it go away,” then default. A defaulted agreement can accelerate enforcement and reduce options.
Step 4: Explore resolution options based on your actual financial reality
This is where strategy matters. The right solution depends on income, assets, filings, and how aggressive the IRS has become.
What Are Your Options at the CP504 Stage?
CP504 doesn’t mean you’re out of options. In many cases, it’s still possible to prevent a levy by pursuing one of these:
Installment Agreement
A structured monthly payment plan can stop certain collection actions if properly set up. The plan has to be realistic — the IRS doesn’t care about your intentions if the payment is unaffordable.
Currently Not Collectible (CNC)
If paying would create financial hardship, the IRS may temporarily pause collections. This doesn’t erase the debt, but it can stop immediate enforcement while you stabilize.
Penalty Abatement
If penalties are inflating the balance, penalty relief may reduce what you owe — especially when there’s a reasonable cause (medical issues, job loss, documented disruptions).
Offer in Compromise (OIC)
An OIC can settle the debt for less than you owe if you qualify. This is not a “everyone gets a deal” program. It’s a financial eligibility program, and doing it wrong can waste months.
Appeal / Collection Due Process (when applicable)
Depending on the notices and timing, you may have appeal rights that can temporarily pause collections while the matter is reviewed.
The Biggest Mistake: Waiting Until After the Levy
If you wait until after money is taken, you’re playing defense under pressure. Your best leverage is before the IRS pushes the button.
If you’ve received CP504 and any of these are true:
- You owe $10,000+
- You have unfiled returns
- You’re self-employed or own a business
- You’ve already ignored prior IRS notices
- You’re worried about wage garnishment or bank levies
…it’s time for a real plan.
Fine & Clear Tax Solutions: Helping Long Island Taxpayers Get Ahead of Enforcement
At Fine & Clear Tax Solutions, we help taxpayers in Uniondale and across Long Island respond to IRS escalation notices like CP504 with a strategy that fits their actual situation — not a generic payment plan that breaks down in 90 days.
If you’re staring at a CP504 letter right now, the goal is simple:
stop the situation from getting worse — then resolve it the right way.
If you want, send the notice details (tax years, amount, and whether returns are filed), and we’ll map the fastest path to prevent enforcement and move toward a lasting resolution.