USTaxPenaltySaverThe IRS Collection Notice Sequence
When you owe the IRS money, the collection process follows a predictable sequence. Understanding where you are in this sequence is critical because your options and urgency level change at each stage. The full sequence typically takes 4-6 months from the first notice to enforcement action.
The sequence is: CP14 (initial balance due) then CP501 (first reminder, about 5 weeks later) then CP503 (urgent reminder, about 5 weeks after CP501) then CP504 (final notice/intent to levy) then LT11 or Letter 1058 (final intent to levy with CDP rights). After LT11, the IRS can begin active collection (levies, wage garnishment, bank seizures).
At each stage, interest and penalties continue to accumulate. The longer you wait, the more expensive the resolution becomes. Taking action at the CP14 or CP501 stage gives you the most options and the lowest total cost.
CP14: Initial Balance Due Notice
The CP14 is the first notice, sent when your return shows a balance due. It is not an enforcement notice. It lists the tax owed, any initial penalties (typically failure-to-pay at 0.5% per month), accrued interest, and a payment deadline of 21 days (or 30 days for balances of $100,000+).
What to do: Review the notice for accuracy, check FTA eligibility (use our free checker), and either pay in full, set up a payment plan, or request penalty abatement. This is the best stage to resolve your balance because you have the most time and the lowest penalties.
CP501: First Reminder
CP501 arrives approximately 5 weeks after CP14 if you have not responded. It is essentially a second billing notice with updated penalty and interest amounts. The tone is still relatively neutral: you owe this amount, please pay.
What to do: All CP14 options are still available. If you could not afford to pay when you received the CP14, consider an installment agreement now. The IRS website allows you to set one up online at IRS.gov/opa if you owe $50,000 or less. Do not wait for the next notice.
CP503: Urgent Reminder
CP503 arrives approximately 5 weeks after CP501. The language becomes more direct: Immediate action required. The updated balance now includes additional months of penalties and interest. This notice signals that the IRS is escalating your case.
What to do: Take action now. You still have all resolution options, but the next notice (CP504) is the final warning before enforcement. Apply for a payment plan, request FTA/Reasonable Cause, or contact the IRS to discuss your situation. If you cannot afford any payment, research CNC (Currently Not Collectible) status.
CP504: Final Notice Before Levy
CP504 is titled Notice of Intent to Levy and Notice of Your Right to a Hearing. This is the most critical notice in the sequence. It means the IRS intends to levy (seize) your state tax refund and may levy other assets. After this notice, enforcement can begin.
The CP504 gives you the right to request a Collection Due Process (CDP) hearing within 30 days. This is a crucial deadline. If you request a CDP hearing within 30 days, all collection action is paused until the hearing is resolved. During the hearing, you can propose alternatives like installment agreements, OIC, or CNC status.
What to do: Do not ignore this notice. If you have not already, immediately apply for an installment agreement, request a CDP hearing (if within 30 days), or contact a tax professional. At minimum, call the IRS at the number on the notice to discuss your options.
LT11: Final Notice of Intent to Levy with CDP Rights
LT11 (also known as Letter 1058) is the final notice before the IRS levies your bank accounts, wages, or other assets. It provides your last opportunity to request a CDP hearing. You have 30 days from the date of this letter to request a hearing.
What to do: Request a CDP hearing immediately if you have not already. Even if the 30-day deadline has passed, you can request an equivalent hearing within 1 year, though it does not have the same collection pause protections. At this stage, you should strongly consider consulting a tax professional if the debt is significant.
Your Options at Each Stage
Pay in full: Available at any stage. Stops all interest and penalties immediately. Pay online at IRS.gov/payments using Direct Pay (free), debit/credit card (fee applies), or by check.
Installment agreement: Available at any stage. For balances of $50,000 or less, apply online at IRS.gov/opa. Monthly payments spread over up to 72 months. Interest continues to accrue but at a reduced penalty rate (0.25% instead of 0.5% per month).
Penalty abatement: Available at any stage. FTA or Reasonable Cause can reduce your balance by removing penalties. Even after receiving CP504, you can request abatement. Use our calculators to check eligibility and generate your request.
Offer in Compromise or CNC: For taxpayers who genuinely cannot pay. OIC allows settling for less than the full amount. CNC pauses collections entirely. Both require financial disclosure. Use our OIC calculator or CNC calculator to assess your eligibility.