If a taxpayer receives a CP 504 and then ignores it, the repercussions are immediate and quite serious. This notice is only sent after two previous notices (CP 501 and CP 503) have failed to get the attention of the taxpayer. The debtor must understand that when the CP 504 IRS notice is received, the IRS is ready to assume a very aggressive stance with regard to collection. If an immediate response to this notice is not forthcoming from the taxpayer, the IRS final notice, also known as the Federal Tax Lien Notice, is dispatched. At this point, assets are precariously close to getting levied. In most scenarios, the CP 504 incorporates the introduction of the tax levy and the mark of the beginning of serious IRS tax problems for the debtor.
There are a few tax resolution firms and tax experts existent who can ably assist the debtor in resolving these specific IRS tax problems. If a person is capable of clearing the balance fully, then he must immediately do so. This can stop the tax levy or tax lien before it actually has begun. But the current financial downturn has adversely affected the financial position of many households. Jobs have been lost, hours have been reduced, and employees have been laid off. Hence, many people are defaulting on their regular tax payments for the first time. Taxpayers sometimes make the mistake of shying away from their IRS tax problems with the understandable, but quite unrealistic, hope that they’ll be forgotten by the agency. One must remember that hiding from the IRS is not only impractical, but is, in fact, illegal.
After each notice is served to the taxpayer, ample time is permitted the debtor to resolve the IRS tax problem. However, the taxpayer will be severely penalized for neglect and procrastination in addressing the debt. After the IRS dispatches the CP 504, a time period of 30 days is provided the taxpayer. Once this has passed, the levy is instituted and a wage garnishment begins. Along with a timely response to the CP 504, the taxpayer must endeavor to pay as much as possible of the amount due within this allotted time frame. The balance accumulates interest that is compounded daily. There is also a penalty assessed because of late payment. Hence, the smaller the unpaid amount the lesser the financial burden. As is so often the case, with respect to the CP 504 and other IRS tax problems which confront the taxpayer, a proactive approach is always advantageous and will lead to a quicker and more equitable resolution.