Updated November 2026 · VG CPA PC advisors
The notice sequence
A CP14 is the first bill after a balance is assessed. If it is not paid, reminders follow, typically CP501 and CP503. A CP504 is a notice of intent to levy that allows the IRS to take state tax refunds and warns that other property can be levied.
The final step before most levies is Letter 1058 or LT11, the Final Notice of Intent to Levy and Notice of Your Right to a Hearing. It gives you 30 days to request a Collection Due Process hearing, which is your strongest procedural protection.
How the balance grows
Interest accrues daily at the federal short-term rate plus 3%, compounded daily. The failure-to-pay penalty is generally 0.5% of the unpaid tax per month, up to 25%. It drops to 0.25% a month while an installment agreement is in place for a timely filed return, and rises to 1% a month once a final levy notice has been outstanding for 10 days.
A federal tax lien may also be filed, which can affect credit and business financing. Paying what you can, even before an agreement is in place, reduces interest and penalties.
What you can do at each stage
At any stage you can pay in full, request a short-term extension of up to 180 days, set up an installment agreement, or ask for currently-not-collectible status if you cannot pay basic living expenses. If the balance itself is wrong, request abatement or file a claim.
Once the final notice arrives, request a Collection Due Process hearing on Form 12153 within 30 days. It pauses most levy action and lets you propose alternatives such as an installment agreement or offer in compromise before an independent Appeals officer.