CP504 / §6331(d) Notice Procedures
IRC §6331(d) vs §6330 · SITLP state refund levy · FPLP federal payment levy · DETL employment tax carve-out · FEDCON federal contractor levy · CAP under IRM 8.24.1 · FAST Act passport certification under IRC §7345
Module
8 of 8
Course ID
TRT-108
Level
EA Part 2 / CPA Practice
Updated
May 2026
Section 1 · IRC §6331(d) vs IRC §6330 — the core distinction
Two separate statutory frameworks. Two different levy authorities.
IRC §6331(d) requires the IRS to provide written notice at least 30 days before any levy, describing the levy rules, appeal rights, collection alternatives, and applicable procedures. CP504 (individual) and CP504B (business) are the §6331(d) notice forms. The notice is a general pre-levy notice — it does not, by itself, provide Collection Due Process (CDP) hearing rights under IRC §6330.
IRC §6330, enacted by the IRS Restructuring and Reform Act of 1998 (Pub. L. No. 105-206, §3401), requires the IRS to provide notice of a right to a CDP hearing before levying property, with limited exceptions. The §6330 pre-levy CDP notice is the "Final Notice" — LT11 (for ACS cases) or Letter 1058 (for field collection cases). The §6330 notice triggers a 30-day window to file Form 12153 (Request for a Collection Due Process Hearing). Taxpayers who timely file Form 12153 are entitled to a CDP hearing with the Office of Appeals, and the IRS may not levy while the CDP proceeding is pending (§6330(e)(1)). Adverse CDP determinations are reviewable in Tax Court under §6330(d)(1).
After CP504 (§6331(d) satisfied) — IRS MAY levy
- →State tax refunds — SITLP under §6331(a)
- →Disqualified Employment Tax Levies — §6330(h)
- →Federal Contractor Levies — §6330(f)(3)
- →Federal payments — FPLP under §6331(h)
- →Jeopardy levy under §6331(a) — immediate threat
Before §6330 Final Notice (LT11) — IRS may NOT yet
- ✓Levy wages under §6331(e) — requires LT11
- ✓Levy bank accounts via Form 668-A — requires LT11
- ✓Levy investment/retirement accounts — requires LT11
- ✓Levy real property or tangible assets — requires LT11
Section 2 · SITLP — State Income Tax Levy Program
State refund levy under IRC §6331(a).
The State Income Tax Levy Program (SITLP) is an automated levy program operated by the IRS and participating state revenue departments per IRM 5.19.9.3. The IRS provides participating states with a weekly file of delinquent federal taxpayers. When the state processes a refund for a SITLP-listed taxpayer, the state diverts the refund to the IRS rather than issuing it to the taxpayer. The statutory authority is IRC §6331(a) — general levy authority after §6331(d) notice is satisfied — not a separate CDP notice.
After SITLP levy occurs, the IRS issues CP92 (Notice of Levy upon Your State Tax Refund and Notice of Your Right to a Hearing) under IRM 5.19.9.3. CP92 is a post-levy CDP notice — the taxpayer has 30 days from CP92 date to file Form 12153 requesting a CDP hearing on the SITLP levy. Post-levy CDP is procedurally weaker than pre-levy CDP — the levy has already occurred, and the operative request becomes return of the levied refund through CDP determination, wrongful-levy claim under IRC §6343(b), or §6343 release request. The strategic incentive is to resolve the underlying liability at the CP504 stage before SITLP levy occurs.
The Municipal Tax Levy Program (MTLP) operates in parallel for participating municipalities. The Federal Payment Levy Program (FPLP) operates on federal payments rather than state refunds.
Section 3 · FPLP under IRC §6331(h)
Continuous levy on federal payments.
The Federal Payment Levy Program (FPLP) was implemented in 2000 by the IRS and the Department of the Treasury, Bureau of the Fiscal Service (BFS). The statutory authority is IRC §6331(h), enacted by the Taxpayer Relief Act of 1997 (Pub. L. 105-34, §1024), which authorizes continuous levies on "specified payments" of up to 15% of each payment. The procedural framework is at IRM 5.11.7 (Automated Levy Programs).
Specified payments subject to FPLP under IRC §6331(h)(2) include: (A) federal employee wages; (B) federal contractor and vendor payments — subject to 100% continuous levy under §6331(h)(3) where payment is for property, goods, or services sold to the federal government; (C) Social Security retirement and disability (OASDI) — but not SSI, which is exempt under IRC §6334(a)(11); (D) Railroad Retirement Board annuity and pension payments; (E) Medicare provider and supplier payments.
FPLP CDP notices differ from manual levy CDP. Per IRM 5.19.9.4: CP90 / CP297 (pre-levy FPLP CDP notices) or CP91 / CP298 (post-levy FPLP notices for Social Security). Practitioners pulling FPLP indicators on the account transcript (TC 971 AC 062, 069, 167, 169, 600, 677, 762) can determine whether a particular FPLP module is at pre-levy or post-levy CDP stage.
Section 4 · DETL — Disqualified Employment Tax Levy
Post-levy CDP for repeat employment tax delinquents.
The Disqualified Employment Tax Levy (DETL) is a carve-out from pre-levy CDP enacted by the Small Business and Work Opportunity Tax Act of 2007, codified at IRC §6330(h). A DETL is a levy on employment tax liabilities (Forms 941, 943, 944, 945, 940, CT-1) where the taxpayer requested a CDP hearing on employment tax liabilities within the previous two years. The statutory rationale: repeat employment tax delinquents who have already exercised CDP rights on prior liabilities should not be entitled to indefinite pre-levy CDP delays on subsequent quarters.
DETL procedure: the IRS may levy without pre-levy CDP notice, but must issue a post-levy CDP notice providing 30 days to file Form 12153. Per IRM 5.11.1, DETL is issued after CP504/CP504B §6331(d) notice satisfaction. Strategic implication: clients with prior employment tax CDP history are at significantly elevated risk for fast-track levy enforcement. Resolution should be prioritized at the CP504B stage rather than waiting for separate LT11.
Section 5 · FEDCON — Federal Contractor Levy
Post-levy CDP for federal payments to contractors.
The Federal Contractor Levy (FEDCON) is a carve-out enacted by Section 2104 of the Small Business Jobs Act of 2010 (Pub. L. 111-240), amending IRC §6330(f) and adding IRC §6330(h)(2). Federal contractor levies may be served after CP504/CP504B §6331(d) notice satisfaction. The post-levy CDP notice — typically CP90 with FEDCON-specific coding — is issued after the levy has been served. The 30-day Form 12153 filing window operates from the date of the post-levy notice. As with DETL, the CDP hearing focuses on collection alternatives and post-levy recovery rather than preventing the levy.
Section 6 · CAP — Collection Appeals Program under IRM 8.24.1
CAP procedure and strategic limits.
The Collection Appeals Program (CAP) is the appeal mechanism available at the §6331(d) notice stage and for various collection actions outside the §6330 CDP framework. CAP is filed using Form 9423 (Collection Appeal Request) per IRM 8.24.1.
CAP procedural requirements — Form 9423 + IRM 8.24.1.3
1. Manager conference — prerequisite
Before filing Form 9423, the taxpayer must first request a conference with the Collection manager. Procedurally mandatory.
2. Form 9423 timing
If the manager conference does not resolve the matter, Form 9423 must be received or postmarked within 3-4 business days of the manager conference. For IA matters, separate timing rules apply per IRM 8.24.1.3.4.
3. Collection action suspension
Per IRM 8.24.1, collection action is suspended while CAP cases are in Appeals — unless Collection determines that withholding action would put collection of the tax liability at risk.
4. Determinations are final
CAP determinations are administratively final — not subject to Tax Court review under §6330(d)(1). Adverse CAP determination leaves CDP rights (when LT11 issues) as the next procedural avenue.
CAP scope per IRM 8.24.1.3 and Form 9423 categories: Liens (filing, refiling, notice of); Levies (proposed or actual — including SITLP, FPLP, FEDCON, DETL); Seizures; Denials of lien certificates (subordination, withdrawal, discharge, non-attachment under IRC §6325); Rejected, modified, or terminated installment agreements; Disallowance of return-of-levied-property under IRC §6343(d); Wrongful-levy claim disallowance under IRC §6343(b).
Section 7 · IRC §7345 — FAST Act passport certification framework
Seriously delinquent tax debt and passport certification.
The Fixing America's Surface Transportation (FAST) Act of 2015 (Pub. L. 114-94, §32101) enacted IRC §7345 authorizing the IRS to certify "seriously delinquent tax debt" to the U.S. Department of State, which is then required to deny new passport applications and may revoke existing passports.
Definition — §7345(b)
Unpaid, legally enforceable federal tax liability of an individual that: (A) has been assessed; (B) exceeds $62,000 (2025 threshold, adjusted annually under §7345(f) — verify current threshold from IRS Notice); and (C) for which a Notice of Federal Tax Lien has been filed and CDP rights have lapsed, OR a levy has been issued.
Exclusions — §7345(b)(2)
Tax debt being paid timely under §6159 installment agreement; tax debt being paid under §7122 OIC; tax debt for which CDP hearing is timely requested under §6330; tax debt where collection is suspended under §6015 innocent spouse provisions.
Certification notice
IRS sends Notice CP508C (Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the State Department). State Department then has authority to deny passport applications, renewals, and may revoke passports.
Reversal — §7345(c)
Certification must be reversed within 30 days when: debt is fully paid; debt becomes legally unenforceable; debt ceases to be 'seriously delinquent'; or §6015 relief is granted.
Judicial review — §7345(e)
Civil action in U.S. Tax Court or U.S. District Court to determine whether certification was erroneous or whether IRS has failed to reverse certification.
Transcript indicator: TC 971 AC 626 indicates FAST Act §7345 passport certification posting on the account transcript. Practitioners should check for this code on engagement when balance exceeds the §7345(f) threshold.
Section 8 · Practitioner decision framework at CP504
Four pathways — selected based on facts.
Pay in full
Where balance is manageable and resources are available, full payment closes the case and stops all collection authority. Confirmation by certified mail or IRS account transcript review.
Streamlined Installment Agreement — IRC §6159
For balances ≤$50,000 with all returns filed. Approvable through OPA or Form 9465 typically within 1-3 business days. Triggers IRC §6331(k)(2) levy prohibition for future periods. Note: §6331(k)(2) does not retroactively suspend SITLP for state refunds already pending in state systems.
Currently Not Collectible — IRC §6343(e)
For taxpayers whose income does not exceed Allowable Living Expense standards. Requires Form 433-A/F with full financial substantiation. CNC determination codes the account with TC 530 — no levy enforcement. CSED continues to run. Strategic for taxpayers within 3-4 years of CSED expiration.
Offer in Compromise — IRC §7122
For taxpayers whose Reasonable Collection Potential is substantially less than the assessed liability. Form 656 + Form 433-A(OIC). OIC submission triggers IRC §6331(k)(1) levy prohibition during processing. CSED tolled under IRC §6503(a). Typical pendency 6-12 months.
Cross-pathway considerations
CAP appeal via Form 9423 may be combined with any of the resolution pathways above where there is a specific collection action to challenge. CAP is most useful where: (a) a specific levy is imminent and there is procedural error to assert; (b) a lien filing is proposed and lien-specific remedies are appropriate; (c) an IA has been rejected, modified, or terminated. CAP is not a general-purpose stalling tool — Appeals routinely sustains procedurally correct collection actions, and CAP determinations carry no Tax Court review.
Section 9 · Practitioner pitfalls
Eight CP504-stage errors to avoid.
Treating CP504 as the final levy notice. CP504 is §6331(d) notice — not §6330 CDP notice. Wage levy, bank levy, and general property seizure require LT11/Letter 1058 first.
Filing Form 12153 in response to CP504. Form 12153 is the §6330 CDP request form. At CP504, the available appeal is CAP via Form 9423 — not CDP. Form 12153 will be misrouted or rejected.
Missing the §6331(d) authority for SITLP. Practitioners who assume CDP rights protect against SITLP after CP504 are incorrect. SITLP operates under §6331(a) general levy authority following §6331(d) notice — no separate CDP notice required.
Failing to identify FPLP indicators on account transcripts. TC 971 AC 062, 069, 167, 169 indicate FPLP coding stages. Pull transcripts and identify FPLP exposure before structuring resolution.
Skipping the manager conference prerequisite for CAP. Per IRM 8.24.1, the manager conference is procedurally mandatory before Form 9423. Skipping this step results in premature referral and CAP rejection.
Missing the CAP filing window after manager conference. Form 9423 must be postmarked within 3-4 business days of the manager conference. Late filing forfeits CAP rights for that collection action.
Confusing FAST Act passport certification with passport revocation. The IRS certifies delinquent tax debt to State Department under §7345. State Department then decides whether to deny or revoke. Reversal of IRS certification triggers State Department decertification — but the timeline can lag.
Failing to negotiate scope at the IA stage. Streamlined IAs at CP504 stage often default to maximum allowable terms. Practitioners can negotiate lower monthly payments where Form 433-A analysis supports it.
Practitioner FAQ
Citation Index — TRT-108
Statutes — IRC
I.R.C. § 6303 (Notice and demand)
I.R.C. § 6321 (Lien for taxes)
I.R.C. § 6323 (Validity and priority)
I.R.C. § 6325 (Release of lien)
I.R.C. § 6330 (CDP notice)
I.R.C. § 6330(a) (Pre-levy CDP)
I.R.C. § 6330(f) (Statutory exceptions)
I.R.C. § 6330(f)(3) (FEDCON)
I.R.C. § 6330(h) (DETL)
I.R.C. § 6331 (Levy and distraint)
I.R.C. § 6331(a) (General levy authority)
I.R.C. § 6331(d) (30-day pre-levy notice)
I.R.C. § 6331(e) (Continuing wage levy)
I.R.C. § 6331(h) (FPLP — federal payments)
I.R.C. § 6331(k)(1) (OIC levy prohibition)
I.R.C. § 6331(k)(2) (IA levy prohibition)
I.R.C. § 6334(a)(11) (SSI exemption)
I.R.C. § 6343 (Release of levy)
I.R.C. § 6343(b) (Return of property)
I.R.C. § 6502 (Collection statute)
I.R.C. § 6503(a) (OIC tolling)
I.R.C. § 6503(h) (Bankruptcy tolling)
I.R.C. § 6672 (TFRP)
I.R.C. § 7122 (Offers in compromise)
I.R.C. § 7345 (Passport certification)
I.R.C. § 7345(b) (Seriously delinquent)
I.R.C. § 7345(c) (Reversal)
I.R.C. § 7345(e) (Judicial review)
I.R.C. § 7811 (Taxpayer Assistance Orders)
Internal Revenue Manual
IRM 5.1.9 (Collection Appeal Rights)
IRM 5.11.1 (Pre-Levy Actions)
IRM 5.11.7 (FPLP Automated Levy)
IRM 5.19.9 (Automated Levy Programs)
IRM 5.19.9.3 (SITLP)
IRM 5.19.9.4 (FPLP Notice Process)
IRM 8.24.1 (Collection Appeals Program)
IRM 8.24.1.3 (CAP procedure)
IRM 8.24.1.3.4 (IA CAP appeals)
IRM 13.1.7 (TAS Case Criteria)
Cases
Bell v. Commissioner, 126 T.C. 356 (2006)
Federal Statutes (Non-Code)
Taxpayer Relief Act of 1997, Pub. L. No. 105-34, § 1024 (FPLP)
IRS Restructuring and Reform Act of 1998, Pub. L. No. 105-206, § 3401 (§§ 6320, 6330)
Small Business and Work Opportunity Tax Act of 2007 (DETL — §6330(h))
Small Business Jobs Act of 2010, Pub. L. No. 111-240, § 2104 (FEDCON)
FAST Act of 2015, Pub. L. No. 114-94, § 32101 (IRC §7345 Passport)
IRS Forms
Form 9423 (Collection Appeal Request)
Form 12153 (CDP/EH Request — §6330)
Form 433-A / 433-A(OIC) / 433-F
Form 656 (OIC)
Form 8379 (Injured Spouse)
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