Understanding IRS Notice CP504B for Businesses

If you have unpaid taxes or haven’t filed your returns, the IRS will start sending you notices asking you to get back into compliance. If you don’t resolve your issue after receiving notices, you may get CP504B. This is a notice for businesses, indicating that the IRS will levy assets if the amount owed isn’t paid immediately.

Notice CP504B is serious and means your property is at risk. Don’t delay getting help – contact us at the Timothy S Hart Law Group today. Our tax experts will help you address the issue quickly and keep your assets protected.

Key takeaways:

• IRS Notice CP504B alerts businesses that the IRS intends to levy their assets because of unpaid taxes.
• You typically receive CP504B after multiple earlier IRS notices, so it shouldn’t come as a surprise, but it can still be alarming.
• Once the IRS issues CP504B, you have 30 days to respond before the IRS can move forward with business asset seizure.
• Ignoring this notice can lead to asset seizure, including real estate, income, or bank accounts.
• Protect your business by paying your balance, applying for a relief option, or talking to a tax attorney right away.

What Is IRS Notice CP504B?

IRS Notice CP504B, Notice of Intent to Levy, alerts you that your business owes taxes or penalties, and the IRS intends to levy assets to cover the balance. You have 30 days to respond to prevent asset seizure. If you do nothing, the IRS can move forward with the levies.

Other information provided on IRS Notice CP504B includes:

• Your original tax balance
• Penalties and interest charges accrued thus far
• Steps to take to avoid levies
• Types of assets that could be levied, including income, bank accounts, and business assets
• How to appeal if you disagree
• Payment options

Notice CP504B is the business version of Notice CP504, which is sent to individuals who owe taxes. If you’ve received either of these IRS notices, contact us to talk about your options.

Who Receives Notice CP504B?

IRS Notice CP504B is sent to businesses, including these types:

• Corporations
• Limited liability companies (LLCs)
• Sole proprietors with EINs

If your business has payroll or other types of tax debt, you can expect to eventually receive this notice if you keep ignoring the IRS. Remember that this won’t be the first notice you receive. The IRS will never levy your assets without giving you opportunities to address the issue.

CP504 vs. CP504B: What’s the Difference?

The standard Notice CP504 is for individual taxpayers, while the CP504B is for businesses. The two types typically provide the same information (amount owed, penalties, interest charges, steps to take to avoid levies), but just have different audiences.

The CP504B will include your business’s EIN as the ID number, while the CP504 will usually have the taxpayer’s Social Security number. In both cases, the IRS will have sent out previous notices about your outstanding balance before threatening asset seizure. Both notice types typically give you 30 days to act before the IRS will levy your property.

What to Do When You Receive Notice CP504B

So, what should you do when your business receives IRS Notice CP504B? Follow these steps to stop the risk of levies to your assets:

Read the Notice Carefully

Verify all details on the notice, including your contact information, the business’s EIN, the amount of tax owed, the tax period, and penalty information.

Pay the Amount Owed

The best and fastest thing to do to avoid levies is to pay what you owe in full, including penalties and interest. This way, the IRS won’t pursue any other collection actions, and your business’s property will be safe from levies.

Request a Payment Plan

IRS installment agreements allow you to pay off your debt over time instead of in one lump sum. This gives you more time to pay down your balance while preventing liens and levies against you. Getting payments on business taxes can be complicated, and for best results, you need the right strategy – that’s where a tax attorney can be critical.

Explore Relief Options

If you can’t afford your tax balance even with a payment plan, consider applying for an offer in compromise, or OIC. OICs are arrangements with the IRS that give you the opportunity to settle your debt for less than owed, but this can be tricky with business taxes. Another option is currently not collectible (CNC) status, a temporary hold on collections that continues until your financial situation changes.

Respond Immediately

Don’t ignore IRS Notice CP504B. Responding as soon as possible ensures you don’t miss the 30-day window to act and prevents levies from taking effect. When you receive this notice, make a payment or contact a tax attorney for help with the right option.

Risks of Ignoring Notice CP504B

What’s at stake with CP504B? If you do nothing, the IRS will continue its efforts to collect what you owe. This notice means the IRS is already planning to levy your assets, which means they could seize your property: bank accounts, income (through wage garnishment), business property, and other assets.

Another risk of ignoring CP504B is a federal tax lien. The IRS may file a lien when individuals and businesses owe money, and the lien is a public record that alerts other creditors to the IRS’s interest in your property. This could impact your ability to get new lines of credit with suppliers, bankers, etc.

Aside from these serious risks, you’ll likely face additional penalties, building interest, and forced collection. Needless to say, acting fast and getting your tax balance under control is important to stay in good standing and keep your business’s assets protected.

Ways to Prevent Levies Moving Forward

Fortunately, there are steps you can take now to prevent levies on your business in the future. Follow these key prevention strategies:

File Your Tax Returns

Filing your returns on time, including income tax returns and payroll tax returns, ensures you don’t have to pay failure-to-file penalties and keeps you current with the IRS.

Pay Off Your Balance

If you can, it’s always best to pay your full tax liability as soon as you get the bill. This way, you avoid failure to pay penalties and interest charges and don’t have to worry about the IRS taking more serious enforcement actions.

Pursue Resolution Options

If you can’t pay your balance in full, consider other options like payment plans, OICs, and CNC status. Another option could be requesting penalty abatement if you have reasonable cause or it’s your first penalty (first-time penalty abatement).

Use Online Payment Tools

To make it easy to pay what you owe, the IRS offers quick and simple online tools, including through their Electronic Federal Tax Payment System (EFTPS). You can also request certain types of business payment plans in your IRS online account.

Create Better Tax Management Strategies

Your business needs an organized approach to tax management so you never miss important deadlines and submit accurate returns. Set up a solid system for compliance to avoid future IRS notices.

When to Work with a Tax Professional

Anytime you get an IRS notice in the mail, it’s a good idea to talk to a tax expert about what the notice means and what you can do to avoid IRS enforcement. If you’re not sure what to do with IRS Notice CP504B, contact the tax experts at the Timothy S. Hart Law Group, P.C. for help.

Our CPA and tax attorney, Timothy S. Hart, will review your case and help you work with the IRS. We’ll advise you on the best path forward to protect your business’s assets and secure better tax management strategies for the future.

Contact IRS Tax Pros to schedule a free consultation with a tax professional.

FAQs About IRS Notice CP504B

Why Did I Receive Notice CP504B?

This notice indicates that your business owes the IRS money, and you haven’t responded to previous notices. Notice CP504B alerts you that your assets are at risk of being levied to cover the debts. CP504B is for businesses, and CP504 is for individual taxpayers.

Can the IRS Levy My Business Assets?

Yes, if your business owes the IRS money and you don’t respond to all the notices they send you, your business’s assets are at risk of being seized. However, if you act quickly, you can prevent levies and get back in good standing.

How Long Do I Have to Respond to Notice CP504B?

As stated in your notice, you have 30 days to contact the IRS to avoid asset seizure. Within that time frame, you need to make your payment, request an installment agreement, or apply for another relief option. If you don’t respond within 30 days, the IRS may move forward with asset seizure.

What Tax Resolution Options Does My Business Have?

Your business can likely set up a payment plan to get your debt paid off through monthly installments. Another option may be an offer in compromise to settle your debt for less when you can’t afford to pay your balance. If you’re experiencing financial hardship, you could qualify for currently not collective status, where the IRS won’t pursue collections until your situation improves. Talk to a tax professional about which resolution option is right for you.

Sources:

Can the IRS Freeze My Bank Account? What You Need to Know

https://www.irs.gov/individuals/understanding-your-cp504b-notice

https://www.irs.gov/pub/notices/cp504b_english.pdf

https://www.irs.gov/individuals/understanding-your-cp504-notice