CP504 notice: intent to levy, and the penalty that doubles
The calculator below starts with the "final notice of intent to levy" box ticked. Enter your unpaid tax, year and filing date to see what the higher penalty adds over the months you take to pay.
- Penalty after the notice
- 1 % a month
- Starts
- 10 days after the notice
- Penalty ceiling
- 25 % of the tax
- Online plan, direct debit
- $29
Balance on October 20, 2027
$21,697
$7,497 added to $14,200 of tax since April 15, 2025; interest now runs at about $4 a day.
| Unpaid tax | $14,200 |
| Failure to file penalty, 2 months | $1,278 |
| Failure to pay penalty, 31 months | $3,053 |
| Interest, compounded daily | $3,166 |
Penalties of IRC 6651 and interest at each quarter's underpayment rate (7 % in the fourth quarter of 2026). From January 2027, interest keeps the 7 % rate of the last published quarter; the next rate is announced by the IRS in November 2026, set at the federal short-term rate plus 3 points (IRC 6621). Estimate, not tax advice.
| Month ending | Penalties | Interest | Balance |
|---|---|---|---|
| December 15, 2026 | $2,769 | $1,962 | $18,931 |
| January 15, 2027 | $2,911 | $2,076 | $19,187 |
| February 15, 2027 | $3,053 | $2,191 | $19,444 |
| March 15, 2027 | $3,195 | $2,297 | $19,692 |
| April 15, 2027 | $3,337 | $2,415 | $19,952 |
| May 15, 2027 | $3,479 | $2,531 | $20,210 |
| June 15, 2027 | $3,621 | $2,652 | $20,473 |
| July 15, 2027 | $3,763 | $2,771 | $20,734 |
| August 15, 2027 | $3,905 | $2,896 | $21,001 |
| September 15, 2027 | $4,047 | $3,022 | $21,269 |
| October 15, 2027 | $4,189 | $3,145 | $21,534 |
| October 20, 2027 | $4,331 | $3,166 | $21,697 |
Compiled by Radif Partners · How we calculate · rules and rates read on irs.gov · not tax advice, the IRS decides
The CP504 is the IRS Notice of Intent to Levy under section 6331(d) of the tax code, sent when earlier bills on a balance went unpaid. It tells you the IRS can levy your state income tax refund and will begin looking for other property to levy: wages and other income, bank accounts, business assets, your car and home, and Social Security benefits. It also warns that a Notice of Federal Tax Lien may be filed and mentions passport certification for seriously delinquent debts. Its cost is immediate: if the tax is not paid within 10 days of a notice of intent to levy, the late payment penalty rises from 0.5 % to 1 % of the unpaid tax per month, until it reaches 25 %. On $14,200 of 2024 tax from a return filed 60 days late, the balance today is $18,588; paid a year from now it is $21,697 after the notice, against $20,816 at the old rate. A payment plan, full payment, or an appeal through the Collection Appeals Program are the replies the notice lists.
What the notice permits, in order
The IRS page on the CP504 describes two stages. Right away, the IRS can levy any state tax refund you are due. If a balance remains after that, the IRS may send a notice of your right to a hearing before the Independent Office of Appeals, if you have not already received one, and it can then levy or seize your other property: wages, real estate commissions and other income, bank accounts, business assets, personal assets including a car and home, and Social Security benefits. The IRS levy page sets the general rule behind that sequence: a levy usually comes only after a bill, a refusal or neglect to pay, and a Final Notice of Intent to Levy and Notice of Your Right to a Hearing sent at least 30 days before.
The CP504 also says the IRS can file a Notice of Federal Tax Lien if it has not done so, a public notice that makes selling or borrowing against property harder, and it explains that the State Department generally cannot issue or renew a passport for a person whose seriously delinquent tax debt the IRS has certified.
The penalty after the notice
The failure to pay penalty page states it in one line: if you do not pay within 10 days after a notice of intent to levy, the penalty is 1 % per month or partial month. At that rate the 25 % ceiling can be reached in 25 months instead of 50, although penalties already charged count toward the same ceiling.
| Paid in full on | Balance at the old rate | Balance after the CP504 | Extra cost of the notice |
|---|---|---|---|
| January 20, 2027 | $19,133 | $19,348 | $214 |
| April 20, 2027 | $19,681 | $20,113 | $433 |
| October 20, 2027 | $20,816 | $21,697 | $881 |
| October 20, 2028 | $23,207 | $23,798 | $590 |
The gap is pure penalty, plus the interest charged on that penalty. In this example the balance already carries a late filing penalty of $1,278 and $1,349 of late payment penalty, so part of the 25 % room is used before the higher rate even starts.
Your balance after a CP504
Balance on October 20, 2027
$21,697
| Unpaid tax | $14,200 |
| Failure to file penalty, 2 months | $1,278 |
| Failure to pay penalty, 31 months | $3,053 |
| Interest, compounded daily | $3,166 |
The replies listed on the notice
Pay the balance. The notice asks for immediate payment, online or by mail with the bottom part of the notice.
Pay part and set up a plan. The CP504 page names the online payment agreement tool as the fastest way to get an installment agreement approved. A balance up to $50,000 qualifies for a Simple Payment Plan without a financial statement; set-up costs $29 online with direct debit. The IRS payment plan page adds that while a plan request is pending, the IRS is generally prohibited from levying. A plan does not reverse the higher penalty rate already in force for months that have passed.
Appeal. The Collection Appeals Program lets you ask for a review before collection action takes place, following the instructions on the notice. A collection due process hearing is a separate right tied to the final notice that precedes a levy on other property. The IRS page on the collection period notes that a hearing request suspends the ten-year collection clock from receipt until the request is withdrawn or decided, appeals included, and that if fewer than 90 days remain at the final determination, the period is extended to 90 days after it.
Tell the IRS what it does not know. If the balance was already paid or a plan is already in place, the IRS asks you to call the number on the notice anyway so the account reflects it. If you disagree with the amount, the same number applies.
When the balance is too large for a plan
For people who cannot pay even over time, the CP504 is the point at which the household numbers matter: hardship status if income does not cover allowable expenses, or an offer in compromise if the collection potential is below the debt. Form 656 warns that the IRS may levy up to the day an IRS official signs an offer as pending and may keep what that levy collected, so the timing of a request matters. The figures above apply the IRS penalty rules to an example; the amounts on your notice are the IRS's, and the IRS decides on every request.