Received a CP504 Notice from the IRS - Not Sure What Steps to Take Next

You need to take this CP504 notice seriously. It's essentially a "Final Notice of Intent to Levy" which means the IRS is warning you that they may seize your property or assets to satisfy your tax debt. While they might not immediately file a lien, the CP504 is typically the last warning before they begin more aggressive collection actions. The timeline for responding is usually 30 days from the date of the notice, so you should act quickly. Since you're already aware of the debt and acknowledge it's legitimate, your best option is to contact the IRS immediately to set up a payment plan. Given your situation (just graduated, between jobs), you should look into an Installment Agreement. The IRS is generally willing to work with taxpayers who proactively address their tax debt. You can request a payment plan online through the IRS website, by phone, or by submitting Form 9465. If your financial situation is particularly difficult, you might also qualify for Currently Not Collectible status, which temporarily pauses collection activities, though interest and penalties continue to accrue.

After getting my own CP504 notice last year, I was freaking out too. I tried calling the IRS for weeks with no luck - always on hold forever or disconnected. Finally found this service called taxr.ai (https://taxr.ai) that helped me understand exactly what I was dealing with. You upload your notice and they explain everything in plain English - what the deadlines actually are, your payment options, and how to avoid liens or levies. The site analyzed my CP504 and showed me exactly what to do next. Instead of panicking, I had a clear plan. The best part was finding out I qualified for an installment plan with much lower monthly payments than I expected. Honestly wish I'd found it sooner instead of losing sleep for weeks!

Just wanted to update after trying taxr.ai for my CP504 situation. I was initially just looking for basic info but ended up getting way more help than expected. The breakdown they gave me highlighted that I actually qualified for penalty abatement (something I had no idea about), which could potentially save me over $1000. They explained that my first-time penalty relief was still available since I hadn't had any penalties in the previous 3 tax years. The step-by-step guidance on exactly what to include in my abatement request was super helpful. Also got clear instructions on setting up an installment agreement that would work with my current income situation without triggering a lien. Definitely worth checking out if you're dealing with a CP504.

After going through a similar CP504 situation, I spent WEEKS trying to get through to someone at the IRS. Kept getting disconnected or waiting on hold for hours only to have the call dropped. Super frustrating when you're trying to avoid having your bank accounts levied! I finally used Claimyr (https://claimyr.com) to get through to an actual IRS agent. They have this system that basically waits on hold for you and calls you when an agent picks up. You can see how it works in their demo: https://youtu.be/_kiP6q8DX5c. After trying for literally 3 weeks on my own, I got through to someone in under 2 hours with their service. The agent helped me set up an installment agreement right there on the phone and confirmed they would halt any further collection activities. Such a relief after stressing about potential levies for weeks.

I need to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway out of desperation since my CP504 deadline was approaching fast. Honestly shocked that it actually worked. I'd been trying to reach the IRS for over 2 weeks with no success - either "call volume too high" messages or 2+ hour holds that ended in disconnection. Used Claimyr yesterday afternoon and got connected to an agent in about 75 minutes without having to stay on the phone the whole time. The agent was actually super helpful and set up an installment agreement that was lower than I expected ($175/month for my $11k balance). She also confirmed this would stop any levy actions and explained exactly what I needed to do to prevent a lien. Worth every penny just for the stress relief of having this resolved before they started hitting my bank accounts.

One thing to consider with a CP504 notice is that even if you set up a payment plan, the IRS can still file a Notice of Federal Tax Lien if your total unpaid balance is over $10,000. This is standard practice for them to protect their interest. I went through this last year - set up an installment agreement but still got hit with a lien because my balance was $11,500. The lien affects your credit and can make it difficult to sell property or get loans. If you're concerned about the lien, you might want to consider paying down the balance below $10k before setting up the installment agreement.

Has anyone had success getting penalties removed from their CP504 amount? I've heard about the First Time Abatement program but not sure if it applies once you've reached the CP504 stage.