Updated April 2025
CP503 is the second notice the IRS sends to taxpayers with unpaid taxes. The notice shows how much you owe in taxes and penalties. It also outlines payment and penalty relief options and says that the IRS may issue a tax lien if you don’t pay.
To protect yourself from escalating collection actions and penalties, you should respond to this notice and make arrangements to pay your tax debt. To get help now, contact us at Wiggam Law today.
Key takeaways on IRS CP503 – second notice of payment due
- What if you disagree? Contact the IRS or a tax attorney immediately if you disagree with the tax due shown on the notice.
- What if you agree? Make payment arrangements and request penalty relief.
- What if you ignore the notice? The IRS could issue a federal tax lien and move forward with additional notices and collection actions.
What Does IRS Notice CP503 Mean?
This notice is a demand for payment. It tells you which penalties the IRS has applied to your account and how much you owe. It also alerts you that the IRS may file a federal tax lien if you don’t pay – the IRS does not need to send you any additional notices before filing a tax lien.
At this point, you are not facing severe consequences. The IRS must send you another notice before taking your assets or garnishing your wages. However, you are incurring penalties, and to protect yourself financially and avoid additional notices, you should contact the IRS to make payment arrangements on your tax debt.
What to do if You Receive a CP503 Notice
Here’s what you should do if you receive this notice about your unpaid taxes:
- Make sure you agree with the amount due – If you disagree with the tax debt shown on the notice, contact the IRS immediately. Otherwise, the agency will assume that you agree with the tax due.
- Note the due date – The due date is typically 21 days after the notice was issued. If you don’t make arrangements by this date, you risk facing additional collection actions.
- Review the options – The CP503 notice lists payment options and outlines how to request penalty relief. You can review this information yourself to make a plan or consider consulting with a tax attorney to discuss the best payment options for your situation.
Unpaid Tax Debt: What Are Your Options?
If you can pay the tax debt in full, do so by the deadline to avoid additional penalties. Otherwise, consider the following options.
Negotiate an Installment Agreement with the IRS
An installment agreement allows you to make monthly payments on the tax debt. Interest and a small penalty (.25% per month) will continue to accrue on the balance, but you will not face collection actions.
If you owe less than $50,000, you can set up a payment plan online without providing any details about your finances. If you owe more, you will still be able to make payments, but you may need to provide financial information to the IRS.
Consider an Offer in Compromise
An offer in compromise agreement lets you settle your tax debt for less than the full amount you owe. It may be the right option if you’re struggling with reduced income and don’t have a lot of equity in your assets.
Apply for Temporary Hardship
You should never have to choose between paying off your taxes and buying essential items like food or paying rent. If paying your taxes will cause this type of undue burden on you, then consider requesting currently not collectible (CNC) status.
If the IRS determines that you genuinely can’t pay, then they will file you under CNC status. This is a temporary delay of collection efforts, but it won’t completely forgive your tax debt. If you later start earning a substantial income or obtain valuable assets, then the IRS might revoke your account’s CNC status and restart collection efforts.
Request Penalty Relief
If you set up payments, you should also request penalty relief. The IRS will remove penalties if you prove reasonable cause or if these are the first penalties you’ve incurred.
IRS Notices: What to Expect If You Have Unpaid Taxes
Generally, the CP503 is the second notice the IRS sends to taxpayers with unpaid taxes. Before this notice, you will generally receive a CP14 or CP501. If you don’t make payment arrangements when you receive the CP503, you may receive some or all of the following notices:
- CP504 – The IRS will seize your tax refunds and may start seizing assets if you don’t respond.
- LT1058 – The IRS could seize your assets (wages, bank accounts, etc) if you don’t pay or appeal in 30 days.
- LT11 – You have 30 days to respond, or the IRS can start seizing assets.
- Other intent to levy notices – The IRS uses a few different notices to alert taxpayers about levies, including asset seizures and wage garnishments.
Check out our IRS notices resource page for information on other IRS collection notices.
Frequently Asked Questions About IRS Notice CP503
Do you have more questions about your CP503 notice, how to handle it, and what type of tax professional to consult in your circumstances? Find out answers to some of the most frequently asked questions below.
What Will Happen if I Don’t Respond to the CP503 Notice?
If you ignore the CP503 notice, the IRS may file a Notice of Federal Tax Lien. A lien is a public notice that the IRS has a legal right to your current assets and future assets. It limits your opportunities and ability to seek out credit. The IRS will also send additional notices and eventually start garnishing wages or seizing assets.
Can I Face Criminal Charges Over My Taxes?
You will not face jail time or criminal charges if you have unpaid taxes and receive notice CP503. However, you may face criminal charges if the IRS believes that you have committed tax evasion or any other type of criminal tax fraud.
For example, say that you receive CP503 and you decide to apply for a settlement. However, you hide assets and don’t report all of your income on the offer in compromise application. This is a deliberate attempt to evade paying taxes, and that is the type of action that may subject you to criminal exposure.
What is the Late Penalty on Unpaid Taxes?
For every month that you do not pay your tax burden, you’ll get charged one-half of one percent. The IRS may increase the penalty to 1% after a certain period of delinquency. The total penalty can go up to as high as 25% of the overall amount of unpaid tax balance.
Will the IRS Remove Penalties and Fees?
The IRS can remove penalties and fees from your account through the penalty abatement process. To be eligible for relief, you generally need to prove that you were unable to comply with paying what you owe due to circumstances beyond your control or that these are the first penalties you’ve incurred in the last few years.
What if I Do Not Agree With the IRS’s Assessment?
If you do not agree with the IRS’ assessment of your tax situation or you believe the agency has made an error with your returns, then contact the IRS immediately to discuss your concerns. In this situation, it might make the most sense to consult with a lawyer and have your attorney discuss the matter with an IRS agent.
Do I Need a Lawyer’s Help to Deal With a CP503 Notice?
It’s not necessary for you to hire a tax attorney to help with a CP503 notice, but leaning on a lawyer’s knowledge, experience, and expertise can help you make better, more informed decisions on how to handle your tax situation. A tax attorney can help advise you on handling future tax matters, too.
Are You Looking for an Experienced Tax Attorney?
The right lawyer will help you understand your obligations and your rights as a taxpayer. They’ll also help you analyze your current financial situation to determine what type of tax resolution strategy might work best for you.
If you’re experiencing tax issues with the IRS, Georgia Department of Revenue, or another state taxing authority, then our team at Wiggam Law can help. Schedule a consultation with our experienced tax attorneys today to learn more about how to navigate your complicated tax situation. For further guidance, call us at (404) 233-9800 or use our contact form to request a consultation.