What IRS Notice CP501 / CP503 / CP504 Mean and What Comes Next

The IRS balance due notice sequence

When you owe a balance to the IRS, the IRS sends a series of notices before taking enforced collection action. The notice sequence follows a predictable pattern:

1. CP14 or CP161: Initial balance due notice sent shortly after the IRS assesses a tax liability
2. CP501: First reminder, sent if the balance remains unpaid after the initial notice
3. CP503: Second reminder, sent if the balance is still unpaid
4. CP504: Final notice, warning that the IRS intends to levy your assets
5. LT11 or Final Notice of Intent to Levy: Sent if CP504 is ignored and the IRS is preparing to seize assets

Each notice is spaced approximately 4-6 weeks apart. The notices escalate in tone and consequences. CP504 is the final notice before the IRS begins enforcement actions such as filing tax liens or issuing levies.

CP501 — First balance due reminder

CP501 is the first reminder that you have an unpaid balance. It is sent after the IRS has already sent an initial balance due notice (typically CP14 or CP161) that was not paid.

What CP501 shows:

• The tax year and type of tax owed
• The total amount due, including tax, penalties, and interest
• The due date for payment (typically 10 days from the notice date)
• Payment options (full payment, short-term payment plan, or Installment Agreement)

CP501 is not an enforcement action—it is a reminder. However, interest and penalties continue to accrue on the unpaid balance until it is paid in full or resolved through a payment arrangement.

What to do if you receive CP501:

• Verify the amount is correct by comparing the notice to your IRS Account Transcript
• Pay the full amount if possible to stop interest and penalties from accruing
• If you cannot pay in full, contact the IRS to request a payment plan (Installment Agreement)
• If you believe the balance is incorrect, contact the IRS to dispute the amount and provide documentation

CP503 — Second balance due reminder

CP503 is sent if the balance shown on CP501 remains unpaid. It is the second reminder in the escalation sequence and indicates that the IRS has not received payment or been contacted about a payment arrangement.

What CP503 shows:

• The same balance due information as CP501, updated with additional interest and penalties
• A new due date for payment
• Payment options and IRS contact information
• A warning that failure to pay may result in enforced collection

CP503 is more urgent than CP501 but is still not a final notice. It indicates that the IRS expects payment or contact soon. If ignored, the IRS will send CP504.

What to do if you receive CP503:

• Verify the balance is correct and matches your IRS Account Transcript
• Pay the balance in full or contact the IRS immediately to set up a payment plan
• Do not ignore this notice—CP504 (final notice) will follow if you do not respond

CP504 — Final notice before levy action

CP504 is the final notice before the IRS begins enforced collection. It is sent if the balance remains unpaid after CP501 and CP503 were ignored or not resolved.

What CP504 shows:

• The total balance due, including updated penalties and interest
• A final deadline for payment or contact
• A warning that the IRS intends to levy your state income tax refund
• A statement that the IRS may file a Notice of Federal Tax Lien or issue a levy on your bank accounts, wages, or other assets

CP504 is your last opportunity to avoid enforced collection. The IRS has the legal authority to levy assets without further notice after CP504 is sent. This includes:

• Seizing bank accounts
• Garnishing wages
• Seizing tax refunds (federal and state)
• Filing a Notice of Federal Tax Lien (public record that affects credit and property)

What to do if you receive CP504:

• Contact the IRS immediately using the phone number on the notice
• Pay the balance in full if possible
• If you cannot pay in full, request an Installment Agreement or other payment arrangement before the deadline
• Do not ignore CP504—levy action will follow

What comes after CP504

If you do not respond to CP504 or make payment arrangements, the IRS proceeds to enforced collection. The next notices you may receive include:

Notice of Federal Tax Lien (NFTL)

The IRS files a Notice of Federal Tax Lien with local or state authorities. This is a public record that:

• Appears on credit reports and lowers your credit score
• Attaches to all current and future property (real estate, vehicles, business assets)
• Makes it difficult to sell or refinance property
• Remains on record until the tax debt is paid or the lien is released

Notice of Intent to Levy (LT11, LT1058)

The IRS sends a final notice (LT11 or LT1058) before issuing a levy. This notice provides:

• 30 days to pay the balance or request a Collection Due Process (CDP) hearing
• Explanation of your rights, including the right to appeal the levy
• Warning that the IRS will proceed with levy action if you do not respond

Levy on bank accounts, wages, or assets

After the final notice period expires, the IRS can issue a levy:

• Bank levy: The IRS freezes your bank account for 21 days, then seizes the funds to apply toward your tax debt
• Wage garnishment: The IRS orders your employer to withhold a portion of your wages and send it to the IRS
• Asset seizure: The IRS can seize and sell property, vehicles, or other assets to satisfy the tax debt

Once a levy is issued, stopping it requires either paying the balance in full, establishing a payment plan, or demonstrating financial hardship through a Collection Due Process hearing.

Why balance due notices escalate

The IRS sends balance due notices in escalating sequence to give taxpayers multiple opportunities to pay or make payment arrangements before enforcement action begins. The escalation serves several purposes:

• Procedural fairness: The IRS provides notice and opportunity to respond before taking enforcement action
• Statutory requirements: Federal law requires the IRS to send specific notices before filing liens or issuing levies
• Encouraging voluntary compliance: Most taxpayers pay or arrange payment after receiving notices, avoiding the need for enforcement

The notice sequence is automated based on account status. Notices are generated when:

• A balance remains unpaid after the previous notice deadline
• No payment arrangement has been established
• The IRS has not been contacted to dispute or resolve the balance

The escalation stops if you:

• Pay the balance in full
• Set up a payment plan and remain current on payments
• Successfully dispute the balance and it is adjusted or removed
• Qualify for Currently Not Collectible status due to financial hardship

How to respond to balance due notices

How you respond to CP501, CP503, or CP504 depends on your ability to pay and whether you agree with the balance shown.

If you can pay the balance in full

1. Pay online at irs.gov/payments using Direct Pay, debit/credit card, or same-day wire
2. Pay by check or money order mailed to the address on the notice
3. Include your Social Security number, tax year, and notice number on the payment

Paying in full stops interest and penalties from accruing and prevents further notices.

If you cannot pay the balance in full

1. Contact the IRS immediately using the phone number on the notice
2. Request a short-term payment plan (up to 180 days) or an Installment Agreement
3. Apply online at irs.gov/opa for payment plans up to $50,000
4. The IRS will typically approve payment plans if you agree to pay within a reasonable timeframe

Establishing a payment plan stops collection notices and prevents levy action, provided you remain current on the payments.

If you disagree with the balance

1. Contact the IRS using the phone number on the notice to explain why you disagree
2. Provide documentation showing the balance is incorrect (payment receipts, prior year transcripts, etc.)
3. Request an adjustment to your account if the balance is wrong
4. The IRS will review your documentation and adjust your account if appropriate

Do not ignore the notice even if you believe the balance is incorrect. Contact the IRS to dispute it before enforcement action begins.

If you cannot pay due to financial hardship

If you cannot pay and cannot afford a payment plan, you may qualify for Currently Not Collectible (CNC) status. This temporarily suspends IRS collection activity. To request CNC status:

1. Call the IRS and explain your financial situation
2. Provide financial documentation (income, expenses, assets)
3. The IRS will review and may place your account in CNC status, stopping collection actions

Note that interest and penalties continue to accrue while your account is in CNC status, but the IRS will not actively pursue collection.