CP503: IRS Second Notice of Balance Due – Meaning & Actions Needed

cp 503

IRS Notice CP503 is a demand for payment of back taxes. You should take this notice seriously - reach out to set up payments as soon as possible. But you don't need to panic yet - the IRS will typically send one or two more notices before resorting to garnishing wages or seizing assets. Here is an example of a CP503.

If you owe tax to the IRS, the CP503 is usually the third notice an individual receives. If your business entity owes taxes, the IRS will send this letter as the second notice of four. The letter lets you know the tax balance owed. It also outlines payment options and warns of actions the IRS may take if you do not pay. Ideally, you should pay off your balance as soon as possible or make payment arrangements to stop collection activity and minimize penalties and interest on your account. Read on to learn more about how to respond to this notice and what to expect if you ignore it.

Key takeaways

CP503 - Second or third demand for payment due; make payment arrangements ASAP.
When it comes - Usually comes four to six weeks after CP501.
What to expect - If you don't respond, the IRS will send one more notice before garnishing wages or seizing assets.
How to respond - Contact the IRS to set up payments or apply for a settlement based on income and assets.
What if you disagree - Hire a tax pro or contact the IRS if you disagree with the balance due or other details on the notice.

What To Do If You Can Pay

If you can afford to pay your taxes in full, send a check to the address on the CP503 notice. Make sure to include the payment stub from the letter and note your identifying details (social security number, tax year, and tax form submitted) on the check. Alternatively, you can make a payment online. Setting up an automatic withdrawal or electronic check from your bank account is usually free, but there is a fee if you want to pay with a credit or debit card.

What To Do If You Can’t Pay

If you can’t afford to pay the whole balance by the due date on the notice, contact the IRS directly or get help from a tax professional. The main options include:

Making monthly payments through an installment agreement,
Having the balance reduced with an offer in compromise, or
Stopping collection activity by securing hardship status (aka currently not collectible status).

Depending on your situation, you may also be able to get penalties waived. To get the best deal possible, you should work with a tax professional. They know how to negotiate with the IRS to get you the payment plan or relief option that’s best for your situation.

What If You Don’t Agree With Notice CP503

Contact the IRS at the phone number listed on the notice if you think it’s been sent in error. Usually, by the time you get this notice, you should have received numerous other warning letters from the IRS. In most cases, if there was an error with an amount due or other details, taxpayers notice that before receiving this particular notice. If the IRS notice is incorrect and you have already made a payment, make sure to contact the IRS as quickly as possible. It is essential to ensure the IRS credits your payment to the right account.

What Happens If You Don’t Pay

You should never ignore a notice from the IRS. If you don’t pay the balance by the due date, the IRS will add more interest and penalties to your account. Additionally, if you ignore Notice CP503, the IRS may issue a Federal Tax Lien in your name. Essentially, a tax lien is a formal announcement to your creditors that the IRS has a right to stake a claim to your assets. Note, however, that the IRS doesn't need to send advance warning about tax liens, so a lien may have already been issued at this point.

The agency may also start looking for assets to levy (take). Typically, you will receive another formal notice of intent to levy before the IRS begins to levy your asset. However, to protect your assets, you should try to make arrangements before that happens. Although the exact timeline varies, the IRS takes similar steps in most collection cases - here's what to expect if you ignore Notice CP503:

Notice CP504 - Another demand for payment and a warning about asset seizure.
Loss of tax refund - The CP504 explains that the IRS will seize your state tax refund, and that can happen before or after you receive the notice.
Passport seizure - If you owe over $65,000 as of 2025, the IRS may seize your passport and send you Notice CP508C.
Final Notice of Intent to Levy - This is the most serious collection notice. There are a few different versions, including the LT1058 and CP90. If you ignore these notices, the IRS can seize your assets in 30 days and even sooner in certain cases of unpaid employment taxes or if you receive payments for being a federal contractor.
Wage garnishment - This can happen 30 days after the IRS sends a final intent to levy notice. The IRS contacts your employer and directs them to send a portion of your paycheck to the IRS to cover your back taxes.
Asset seizure - If you don't pay your taxes, the IRS can seize bank accounts, investment accounts, certain retirement accounts, and physical assets, including your home or car in some rare cases.

Ideally, you should respond when you receive the CP503, but if you ignore the notice, you will typically receive two more notices before the IRS can move forward with seizing your assets. In other words, you should take the CP503 notice seriously, but you don't need to panic - you have two or possibly even three months before things get dire. If you wait until you receive a Final Notice of Intent to Levy, you can request a Collection Due Process hearing, which allows you to set up payments, and you can also dispute the tax balance due but only if you haven't had a chance to do so earlier. However, if you don't make payment arrangements and the IRS garnishes your wages or seizes your assets, it's very hard to reverse those actions.

FAQs About CP503

What is the due date for Notice CP503?

The due date is noted on the bottom right of the first page of the notice - it's usually on a detachable payment stub. Payment is due 21 days after the notice was generated or 10 days if you owe over $100,000.

Where should I mail the payment for CP503?

The mailing address is on the payment stub on the notice. Otherwise, pay online at EFTPS.gov using your tax ID number and bank account details or pay through your IRS online account.

What if I already paid in full?

If you paid in full sometime in the last 21 days, this notice was probably generated before the IRS received your payment. In this situation, the IRS says to ignore the notice. But for your own peace of mind, you may want to check online to make sure your payment has been received and properly credited, or you may want to call the IRS. A tax pro can also check your payment history online if you authorize them to do so.

What if I already set up installment payments?

On Notice CP503, the IRS states to disregard the notice if you are already making installment payments. However, to be on the safe side, you should double-check that you're making payments - check your bank statement to see if a payment was withdrawn the previous month, or look at your IRS online account to make sure your installment agreement is still active.

What if I'm on currently non non-collectible status?

The IRS says to ignore this notice if you're on CNC status. However, if you get a Final Intent to Levy Notice (CP90 or LT1058), you should contact the IRS to make sure your CNC status is still active.

What Is Notice CP503H?

Similar to the traditional CP503, Notice CP503H also lets you know that you owe taxes to the IRS. But this notice is focused on your shared responsibility payment (SRP) account. The SRP is the amount you owe if you don’t have minimum health insurance coverage for yourself or your dependents. The SRP doesn't apply to tax years after 2018, but you may receive this notice for tax years 2018 or earlier.

You can make a payment in full by writing a check and returning the pay stub at the bottom of the form. You can also contact the IRS to set up a payment plan. If you don’t make full payment by the due date, the IRS may add interest to your balance. Under federal law, the IRS cannot issue a lien for this part of your tax liability. The IRS also cannot levy your assets for SRP. However, the IRS may keep federal, state, or local tax refunds and apply those amounts to your SRP tax bill.

How to Get Help If You Receive Notice CP503 or CP503H

To get help if you receive Notice CP503, use our site and reach out to a licensed tax professional who has experience resolving IRS issues. They will start with a free consultation. Then, they will advise you of the best steps to take in your situation. Additionally, they can help you set up a payment plan, review your eligibility for a settlement, or make other arrangements with the IRS and state taxation authorities.