CP504 Notice received - should I trust my accountant or pay the IRS immediately?

I'm really freaking out right now and need some advice. My husband and I received a CP504 Notice from the IRS threatening to levy our assets if we don't pay approximately $2,700. The whole situation started because my employer sent an incorrect W2 to our accountant last year. We caught the mistake and forwarded the correct W2 to him immediately. We've been getting notices about owing money for several months now, and each time our accountant tells us not to worry - he says he's calling the IRS regularly and has submitted paperwork to fix this. Now that we've received this CP504 with the levy threat, I called him in a panic, and he seemed almost pleased about it. He said this might actually help because now someone at the IRS might actually pick up when he calls. When I suggested just paying the amount to stop the stress and potential levy, he strongly advised against it. He insisted we shouldn't pay what he calls the "assumed IRS amount" and that he wants us to only pay the "correct amount" once this is resolved. I trust him generally - he's been our accountant for years - but these notices are getting increasingly threatening, and it's causing me serious anxiety. We could easily pay the $2,700 right now to make this go away, but he's adamant we shouldn't. Is it normal for a tax professional to tell you NOT to pay when you're getting levy notices? Should I trust his judgment on this or just pay to avoid a levy?

0 coins

18 comments

Liam O'Donnell

•8M

You're in a tough spot, but I'd actually lean toward trusting your accountant here. The CP504 is definitely scary (it's designed to be), but there's a logical explanation for your accountant's advice. If you pay the incorrect amount now, it actually makes it harder to resolve the underlying issue. The IRS will consider the case "satisfied" and stop prioritizing it, but you'll likely need to file for a refund later, which is a whole separate process that can take months or years. Your accountant has probably seen this play out many times. The fact that he's not worried is a good sign. He knows the original W2 was incorrect, and paying the assessment would essentially be admitting the incorrect amount is accurate. Some practical steps you might take: Ask your accountant for copies of all the paperwork he's submitted to the IRS. Also request a timeline and plan for resolution. This gives you documentation while letting him know you need more communication during this stressful time.

0 coins

Liam O'Donnell

•8M

You should ask for a copy of any amended return that was filed to correct the W2 error, along with proof of filing (like a certified mail receipt or electronic filing confirmation). Also request copies of any correspondence he's sent to the IRS explaining the situation. It would also be helpful to get a Protection Against Levy form or request for hold on collection actions if he's submitted one. Finally, ask if he's requested a formal appeal or review of the assessment, as this often puts a temporary hold on collection activities while the amount is being disputed.

0 coins

Amara Nwosu

•8M

I went through something very similar last year when the IRS thought I owed $3400 due to a reporting error from my investment account. The notices kept escalating until I finally got the dreaded CP504. The stress was unreal! After spending hours trying to call the IRS with no luck, I found this tool called taxr.ai (https://taxr.ai) that helped me understand exactly what was happening. You upload your tax documents and notices, and it analyzes everything to tell you what's really going on and what your options are. It showed me that my accountant was right to fight it rather than pay. The tool explained that my situation was a common reporting error and showed me the exact timeline I could expect for resolution. The best part was that it gave me a personalized checklist of documents I needed to gather to help my accountant resolve it faster. Saved me so much stress knowing exactly what was happening behind the scenes!

0 coins

Amara Nwosu

•8M

It breaks down the notice and explains what's happening in plain English, then it gives you specific action steps based on your situation. It doesn't just explain - it shows you exactly what documentation you need to respond effectively. For your stock sale issue, it would analyze both your reporting and what the IRS is claiming, then identify exactly where the discrepancy is coming from. Sometimes it's as simple as a brokerage reporting gross proceeds while you correctly reported net gains after basis. Google can tell you generic info about notice codes, but taxr.ai analyzes your specific documents to identify the actual problem. And yes, while accountants know what these notices mean, they often don't have time to explain everything in detail. This gives you personal clarity while your accountant works on the solution.

0 coins

Giovanni Moretti

•8M

I tried taxr.ai after posting my skeptical comment, and I need to eat my words. It was actually super helpful with my CP2000 notice about those unreported stock sales. Turns out my brokerage had reported some sales to the IRS with $0 cost basis (making it look like 100% profit), but I had the correct basis information in my records. The tool identified exactly which transactions were causing the issue and gave me a template for my response letter to the IRS. The analysis showed me I was actually right all along but needed specific documentation to prove it. My accountant was too busy to explain all this clearly, but taxr.ai laid it out step by step. Three weeks after sending in the documentation it recommended, I got a letter saying my case was resolved with no additional tax due. Definitely worth it for the peace of mind alone.

0 coins

Fatima Al-Farsi

•8M

After dealing with CP504 notices and other IRS headaches for years as part of my job, I'd suggest one additional step: try to get actual confirmation from the IRS about the status of your case. Your accountant might be right, but it never hurts to double-check. The problem is actually getting through to the IRS on the phone - it's basically impossible these days. I recently discovered a service called Claimyr (https://claimyr.com) that gets you through the IRS phone tree and holds your place in line. Check out how it works: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but I used it last month when we had a similar issue with a client facing a levy. Claimyr got me connected to an IRS agent in about 40 minutes (instead of the usual 3+ hours of hold time or just getting disconnected). The agent confirmed they had received our paperwork but it hadn't been processed yet, and they put a 60-day hold on collections while it was reviewed.

0 coins

Fatima Al-Farsi

•8M

Claimyr uses an automated system that navigates the IRS phone menus and waits on hold for you. When an actual IRS agent picks up, you get a call connecting you directly to that agent. It's basically like having someone else wait on hold instead of you. For your penalty issue, this would let you talk to an actual human at the IRS who can look at your account and potentially remove the penalty while you're on the call if it was clearly a mistake. I completely understand the skepticism. I felt the same way initially. But the time savings is significant - you can go about your day instead of being stuck on hold for hours, and you actually get through instead of being disconnected. They're solving a real problem for people who need to speak with the IRS but can't afford to waste entire days trying.

0 coins

Sofia Perez

•8M

I need to follow up on my skeptical comment about Claimyr. After another frustrating morning of getting disconnected by the IRS three times, I decided to try it. I was shocked when I got a call back about 50 minutes later connecting me to an actual IRS representative. I explained my situation with an incorrect CP504 notice I received (similar to the original poster), and the agent confirmed they had received my accountant's paperwork but it was sitting in a processing backlog. The most valuable part was that the agent put a 45-day hold on any collection actions while they review my documentation. My accountant had been telling me everything was "being handled" for months, but this was the first concrete action that actually protected my bank accounts from a levy. If you're dealing with a CP504, talking directly to the IRS gives you peace of mind that your accountant simply can't provide. Worth every penny for the time saved and the stress relief of knowing exactly where things stand.

0 coins

Dmitry Smirnov

•8M

Your tax guy is probably right, but there's a middle ground option you might consider. You can set up an installment agreement with a very small monthly payment (like $25) while your tax pro continues to resolve the actual issue. This typically stops collection activities including levies, gives you a formal agreement with the IRS, but doesn't require you to pay the full incorrect amount. If your accountant resolves it in your favor, you can get refunded for whatever small payments you made. I went through almost exactly this same situation when my employer issued a corrected W2 but the IRS assessment was based on the original incorrect one. My accountant was working on it, but I couldn't sleep at night worrying about levies, so the small installment payment was my compromise solution.

0 coins

Dmitry Smirnov

•8M

Setting up the installment agreement doesn't mean you're agreeing the amount is correct. The IRS allows you to dispute the underlying tax while still having a payment arrangement in place. You can specifically request that your agreement be processed with "pending audit reconsideration" or "disputed liability" noted on your account. When the dispute is resolved, if it turns out you owe less or nothing, the IRS will refund any excess payments automatically. I made about four $25 payments before my situation was resolved, and I received those payments back with my refund. The peace of mind was worth the temporary $100 out of pocket.

0 coins