IRS Notice LT16: What It Means and What to Do

IRS Notice LT16 is a reminder that you owe taxes and/or have unfiled returns. This notice says that the IRS has assigned your account for review and possible enforcement activity. This letter comes from the IRS's Automated Collection System ACS, and it often comes right before the IRS assigns your case to a revenue officer. To avoid additional penalties and collection actions, make arrangements on your tax debt, file unfiled returns, or let the IRS know that you don't have to file.  To get help now, use TaxCure to find a tax professional who can help you deal with your tax debt or other IRS problems.

Key takeaways

• LT16 - you have unpaid taxes or unfiled returns.
• When it comes - it's never the first collection notice. It may come several months or even years after you incur tax debt or fail to file a tax return.
• What to expect - if you don't make payment arrangements, the IRS will send additional notices and may start involuntary collections against you.
• How to respond - contact the IRS to make payment arrangements or contact a tax attorney for help. 
• What if you disagree - contact the IRS if you disagree with the balance due, penalties, or other aspects of the notice. Consider reaching out to a tax pro for representation.

What to Do If You Receive IRS LT16

The LT16 notice explains why the agency is contacting you and outlines your options. If you have unfiled returns, you should file them or explain to the IRS why you don't need to file for those years. If you have unpaid taxes, consider the following options:

• Pay your unpaid tax balance in full
• Set up a payment plan with the IRS
• Apply for a hardship status if you cannot afford to pay your bill

You don't have to deal with the IRS on your own. A tax resolution specialist can help you determine the best steps to take, and they can guide you through the process. 

What Does "Assigned Your Account for Review and Possible Enforcement Actions" Mean?

The LT16 often contains language like "we have assigned your account for review and possible enforcement actions". This generally means that your account was in the automated system, but it has been flagged for a manual review. This typically means that an IRS employee is going to look over your tax account. Then, they can recommend enforcement actions that may include demands for payment, wage garnishment, asset levies, or even a request for a face-to-face meeting. Again, however, before taking very serious collection actions, the agency will send you an additional notice. 

What If You Don't Agree With IRS Notice LT16

There are many situations where you may have received LT16 in error. Here are some of the most common questions we hear from people who have received LT16 in error, along with brief tips on what to do if you disagree with this notice or its details.

• Already filed your tax return - if you submitted your return in the last few weeks, check your online account to see if it's been received. If it's been more than 10 weeks, you should file a new return.
• Don't need to file a return - If you didn't have a filing requirement for the year in question, reach out to the IRS to explain that you didn't need to file.
• Already paid in full - if you paid less than 21 days ago, the IRS says to ignore this notice. Otherwise, check your IRS account and your bank account to make sure that the payment has been processed and applied to your tax bill.
• Already have a payment plan - double-check that the installment agreement is still active, and then continue making monthly payments as usual.
• Tax due is incorrect - you typically don't have appeal rights at this point for the tax due shown on the balance, but a tax pro can talk over options with you, such as an offer in compromise based on doubt as to liability. However, if the tax due is incorrect due to actions taken by your spouse (without your knowledge) or due to identity theft, then you should explore the points below.

What if I'm the victim of tax identity theft?

If you believe that you received LT16 due to identity theft, you should call the number noted on the form. You may also need to file Form 14039 (Identity Theft Affidavit) and take additional steps to protect yourself, such as freezing your credit. 

What if my spouse is responsible for the tax on LT16?

When spouses file a tax return together, they share the responsibility for the tax balance, but there are a few exceptions to this rule. Namely, if your spouse underreported the income on your return and then the IRS adjusted the return, you may be able to qualify for innocent spouse relief. To get approved, you must establish that you didn't know about the understatement and had no reason to know. If approved, you will only be responsible for your portion of the tax bill.

What if my ex-spouse was ordered to pay this tax debt in a divorce?

Unfortunately, even if your ex-spouse was ordered to pay this tax debt in a divorce decree, you are still legally responsible for the tax debt. The IRS can go after your assets to collect the debt. 

What Happens if You Ignore IRS Notice LT16?

If you ignore LT16, penalties and interest will continue to accrue on your account, and your balance will grow. The IRS may also decide to move forward with additional collection actions, including assigning your account to a revenue officer, sending it to a private collection agency, or pursuing involuntary collections such as wage garnishment or asset seizure. If you file a tax return showing a refund, the IRS will seize your refund to cover your tax debt. If you have unfiled returns, the agency will hold onto your refund just in case you owe taxes from the years you haven't filed yet.

Is the IRS Going to Seize My Assets?

LT16 says that if you don't pay or make arrangements in 10 days, the IRS may start enforcement actions. At this point, the IRS can only issue federal tax liens, seize your state or federal tax refunds, or certify your tax debt to the State Department so that they revoke or deny your passport. Luckily, however, the agency must send an additional notice before taking assets. However, if you ignore LT16, you may soon get a Final Intent to Levy notice, and 30 days after sending that, the IRS can garnish wages, freeze bank accounts, and/or seize assets.

Why Is There a QR Code on LT16?

Recently, the IRS decided to redesign several of its notifications including LT16, and one of the design updates included adding a QR code. You can scan this code to get more information on your letter. The QR code should direct you to a relevant section of the IRS's website or to your personal tax account. 

Real Stories of Taxpayers Receive an LT16

On Reddit, one user posted about receiving an LT19 showing a tax debt of $19,000 and two years of unfiled returns. They explained that they had defaulted on an IRS payment plan, and they had not filed two years of returns after experiencing a significant drop in income. Other Reddit users chimed in and said that there was no need to panic over this notice, and they advised the original poster to file their unfiled returns and call the IRS about the balance. 

Here's the good news - with just a single phone call to the IRS, the poster was able to get a 30 day pause on collections. That gave them time to deal with the unfiled returns. Then, once they know exactly how much they owed in total, they could contact the IRS to requst an installment agreement or whatever other option makes the most sense in their situation. 

How to Deal With IRS Notice LT16

LT16 is a serious notice. The IRS is letting you know that it plans to enforce collection activities on your account, and these actions can include seizing the money in your bank account, garnishing your wages, keeping state tax refunds, placing liens on your assets, or taking your passport. Do not ignore notice LT16. Instead, reach out to a tax professional to help. 

At TaxCure, we have an extensive directory of tax resolution specialists who focus on all kinds of different tax issues, and our algorithms can help you find the best professional for your situation. Don't let the IRS start collection activities on your account — use TaxCure to find a tax specialist to help you today.