Received an LT16 Notice From the IRS. What Does It Mean?

Received an LT16 Notice From the IRS. What Does It Mean?

The IRS sends LT16 notices to taxpayers who have unpaid taxes and/or missing tax returns. If you received an IRS LT16 notice, resolve your tax issue with the IRS as soon as possible to avoid collections enforcement actions, like federal tax liens and wage garnishments.

How Much Time Do You Have to Respond to an LT16 Notice?

Unlike other IRS collection notices, you have only 10 days to respond to an LT16 notice. The LT16 letter explains why the IRS is contacting you and includes different response options depending on whether you have unfiled tax returns or an outstanding tax debt.

What Happens If You Ignore an IRS LT16 Notice?

LT16 is one of the many notices that the IRS sends for tax issues. Most taxpayers receiving an IRS LT16 notice have already been notified several times about unpaid taxes and/or missing tax returns. If you ignore the LT16 notice, the IRS can take the following enforcement actions:

  • Garnish your wages
  • Seize your assets
  • Seize your passport or freeze your application for a new passport
  • Issue a federal tax lien

You should also note penalties and interest will continue to be added to your tax liability. If you have unfiled tax returns, the IRS can file a substitute tax return for you. In this case, you potentially lose tax refunds you would have otherwise received.

What Do You Need to Do to Avoid Enforcement Action by the IRS After Receiving an LT16 Letter?

The following are some of the options to avoid enforcement actions by the IRS after you received your LT16 notice:

  • File Missing Tax Returns: Determine which tax returns are missing and file them. It is advisable to consult a tax attorney or accountant to help you file the missing returns. An experienced tax expert will also ensure you are not missing any deductions, which can help reduce your tax liability.
  • Pay Tax You Owe the IRS: Consider paying the full amount listed at the bottom of the LT16 notice if you can. The IRS provides several payment methods, including by check, electronic payment, debit, or credit card.

What Are Your Options If You Can’t Pay Your Full Tax Debt or Any of Your Tax Debt?

If you received an LT16 notice and cannot pay your full tax debt or any of your tax debt, you have the following tax relief options:

  • If you can pay your full tax debt but need more time, arrange a monthly payment plan or installment agreement with the IRS.
  • If you want to settle your full tax debt for less than what you owe, submit an Offer in Compromise (OIC) to the IRS.
  • If you cannot pay any of your tax debt because it will create financial hardship, request “Currently Not Collectible” status from the IRS. This will temporarily stop collections until your financial situation improves.

What If You Received an LT16 Notice Due to Fraud or Identity Theft?

If you believe your LT16 notice is due to fraud or identity theft, call the IRS number printed on the LT16 as soon as possible. You should also file Form 14039 (Identity Theft Affidavit) and seek help to protect yourself, including having your financial providers freeze your credit.

What If Your Spouse Is Responsible for the Tax on an LT16 Notice?

When spouses file taxes jointly, they typically share responsibility for the tax balance. However, if your partner is entirely responsible for the tax debt on your LT16 notice, you could be eligible for Innocent Spouse Relief. Consult a tax expert to help with the application process for an Innocent Spouse Relief.

What Are My Appeal Rights for an LT16 Notice?

There are many situations where you may have received an LT16 notice in error. These could include an LT16 that shows an incorrect tax balance or where you have already made a payment. Follow the instructions provided on the notice to start the appeal process. You should also gather all documentation you need to dispute the IRS claims. The appeal process can be complicated, and it is advisable to work with an experienced tax professional.

In addition to an LT16 Notice, What Other IRS Notices Do You Receive Before a Levy?

In addition to an LT16 notice, the IRS sends a Final Notice of Intent to Levy, known as an LT11 notice. The LT11 empowers the Revenue Officer to levy and start a tax collection case investigation by visiting your home or office.

Finally, receiving an LT16 notice could mean you are facing hefty penalties and collection action from the IRS. Do not wait for an LT11 notice before taking steps to resolve your tax issue. Seek the help of a tax professional to solve your tax debt issues and protect yourself from a federal tax lien or wage garnishment.

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