IRS Notice CP503: Second Reminder Before a Levy Notice

You received a CP503 because the IRS still hasn't received payment or a response after the CP14 and CP501. The notice shows your updated balance and a new due date. The IRS's guidance on this notice says you must pay the entire balance by that date to avoid more penalties and interest.

At this point your account is late in the reminder stage. The IRS has not yet sent a levy notice, but it is formally warning you that a federal tax lien may be filed if it hasn't already been.

Pay or make arrangements by the due date shown on the CP503. If you have questions, the IRS asks that you call the toll-free number on the notice before that date. A payment plan request made before the deadline usually stops the account from advancing to CP504.

If the CP503 is ignored, the next letter is usually the CP504 Notice of Intent to Levy, which allows the IRS to levy your state tax refund and warns that wages, bank accounts and other property are next. A federal tax lien can be filed at any point now — especially for balances over $10,000. A lien attaches to everything you own and anything you acquire while it's in place, and it can make selling or refinancing property difficult.

1. Treat the due date as firm.
2. If you owe $50,000 or less and have filed every return, apply online for a Simple Payment Plan — it doesn't require a lien determination.
3. If you owe more, call the IRS and be ready to provide a Collection Information Statement (Form 433-F or 433-A).
4. Make sure every required return is filed; plans require filing compliance.
5. Request first-time penalty abatement if your prior 3 years are clean.
6. If you can't afford a payment, ask about Currently Not Collectible status or check Offer in Compromise eligibility.

Read the official IRS explanation: Understanding your CP503.

Often. Paying the balance below $10,000 or getting onto an approved plan reduces the chance of a lien filing. The IRS says Simple Payment Plans don't require a lien determination, which is one reason to apply before the balance grows. If a lien is already filed, you can ask for withdrawal in some cases after you enter a direct-debit plan or pay in full — see how tax liens work.

The IRS collection notice stream follows a predictable order. Knowing where your letter sits tells you how much time you have and what the IRS is legally allowed to do next.

• CP14 — the first bill. It says you have a balance due and asks you to pay within 21 days.
• CP501 — the first reminder that the balance is still unpaid.
• CP503 — the second reminder. The IRS may file a Notice of Federal Tax Lien if it hasn't already.
• CP504 — Notice of Intent to Levy under IRC section 6331(d). The IRS can now take your state tax refund and warns that wages and bank accounts are next.
• LT11 or Letter 1058 — Final Notice of Intent to Levy and Notice of Your Right to a Hearing. You get 30 days to request a Collection Due Process hearing.

The gaps between letters are usually several weeks, but the IRS does not have to send every letter, and some accounts skip straight from CP14 to CP504. See our overview of all IRS notices for the full list.

Every notice in the sequence can be resolved with the same set of IRS programs. Which one fits depends on how much you owe and what you can realistically pay each month.

• Payment plan (installment agreement): individuals who owe $50,000 or less in combined tax, penalties and interest and have filed all returns can usually set up a Simple Payment Plan online, with no financial statement. The online setup fee is $29 with automatic withdrawals or $69 without.
• Short-term plan: if you can pay within 180 days and owe less than $100,000, there's no setup fee — interest and penalties still accrue.
• Offer in Compromise: settles for less than the full balance only when the IRS agrees you can't pay in full through income and asset equity. The application fee is $205 unless you meet the low-income certification.
• Currently Not Collectible status: pauses active collection if paying would leave you unable to cover basic living expenses.
• Penalty abatement: first-time abatement or reasonable cause can remove failure-to-file and failure-to-pay penalties, which also removes the interest charged on those penalties.

Our tax settlement calculator shows which of these your situation points toward in about a minute.

Doing nothing is the most expensive choice. Interest accrues at the federal underpayment rate — currently 7% a year, compounded daily — and the failure-to-pay penalty adds 0.5% of the unpaid tax per month, up to 25%. Once you're on an approved payment plan (and filed on time), that penalty drops to 0.25% a month. If you ignore a notice of intent to levy, it rises to 1% a month starting 10 days after the notice. Use the penalty and interest calculator to see what waiting costs on your balance.

You can handle most notices yourself by calling the number on the letter or using your IRS Online Account. Consider professional help — an enrolled agent, CPA or tax attorney — if you owe more than $50,000, have several unfiled years, run a business with payroll taxes, or are already facing a levy. If the IRS is causing you financial hardship, the free Taxpayer Advocate Service can step in. Be wary of any company that promises to settle your debt for a fraction of what you owe before reviewing your finances — read how to choose a tax relief company.