IRS Notice CP503: what it means and what to do
A CP503 means the IRS has written to you at least twice and hasn't heard back. The next letter is a notice of intent to levy, so this is the time to act.
What a CP503 means
The CP503 is the IRS's second reminder that you have an unpaid balance. It usually arrives a few weeks after the CP501. It shows your updated balance and a date to pay or contact the IRS by.
The notice also warns that the IRS may file a Notice of Federal Tax Lien, and that it's getting ready to send a notice of intent to levy.
What a federal tax lien is
A tax lien is the government's legal claim against your property, such as your home, car and bank accounts, when you don't pay a tax debt. When the IRS files a Notice of Federal Tax Lien, it becomes public record.
- It can make it harder to sell or refinance your home, or to get a loan.
- It attaches to property you own now and property you get later, until the debt is paid or resolved.
- The IRS generally files liens on larger balances, often over $10,000, but it can file on any amount.
A lien isn't the same as a levy. A lien is a claim; a levy actually takes the property.
What to do now
- Check the balance against your records, and respond with proof if it's wrong.
- Pay in full if you can. Paying now avoids a lien and stops the levy process.
- If you can't, set up a resolution right away. A payment plan is the most common option. If you owe $50,000 or less, you can usually set one up online, which may also keep the IRS from filing a lien. See how IRS payment plans work.
- If you can't afford any payment, you may qualify for "currently not collectible" status, which pauses collection while you get back on your feet.
What happens if you ignore it
The IRS will send a CP504, a notice of intent to levy. That lets it take your state tax refund right away, and it's followed by a final notice that opens the door to wage and bank levies.
Where CP503 fits
The IRS sends collection notices in this order. A CP503 is the third one.
Common questions
Does a CP503 mean the IRS filed a lien?
Not by itself. It warns that a lien is possible. If the IRS files one, you'll get a separate letter (often Letter 3172) telling you about it and about your appeal rights.
Will a tax lien show up on my credit report?
The major credit bureaus no longer include tax liens on credit reports. But liens are public records, and lenders, title companies and landlords can find them.
Is it too late to set up a payment plan?
No. You can set up a plan at any stage, even after a levy has started. It's just easier and usually cheaper the earlier you do it.
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Written by Jonathan Samuel, EA, an Enrolled Agent licensed to represent taxpayers before the IRS. This page is general information, not advice for your specific situation.