What Does IRS Notice LT17 Mean?
The IRS sends many different letters and notices to taxpayers, and if you owe federal income tax, you may receive notice LT17 (Please Take Action on your Balance Due Using Our Online Services). This guide explains what to do if you receive LT17 and what happens if you ignore this notice.
What Is IRS Notice LT17?
IRS Notice LT17 is the IRS's request to use online services to take action on your unpaid tax balance. This letter outlines the different options you can use to take care of your tax liability, and it provides links and QR codes to help you navigate the IRS website.
What Should You Do If You Receive LT17?
If you receive LT17, you should make arrangements to deal with your tax liability as soon as possible. Here are your main options:
- Pay your balance in full
- Set up a payment plan to pay your balance in installments
- Request an offer in compromise to settle your balance for less than you owe
- Apply for relief from penalties
- Obtain hardship status if you cannot afford to pay your tax liability
- Appeal incorrect tax assessments
Failure to deal with your unpaid taxes can cause the IRS to take action on your account. The agency has a lot of recourse for collecting taxes, and if you want to minimize the effect on your finances, you should always reach out to the IRS before its agents start collection activities on your account.
What Happens If You Ignore LT17?
If you ignore notice LT17, the IRS may enforce collection activities on your account. In other words, if you don't pay, the IRS will find a way to force you to pay your tax bill, and collection activities can include the following:
- Garnishing your wages
- Placing liens on your property
- Seizing the funds in your bank account
- Claiming your assets
- Taking your passport
The IRS also has the right to take state and federal tax refunds. Keep in mind that this agency has more rights than most private creditors — even declaring bankruptcy does not have the power to eliminate all of your tax liabilities.
What If You Received LT17 But You Already Paid Your Tax Bill?
The IRS only sends LT17 to people who owe a tax bill, and if you have already paid your tax bill, you are either receiving this notice in error or the IRS hasn't received your payment yet.
Keep in mind that payments can take up to 21 days to process. If you paid your entire balance in the last 21 days, disregard this notice. If you paid over 21 days ago, contact the IRS to make sure the agency received your payment. You can set up an online account to check your balances and see what payments have been received or credited.
What If You Receive LT17 But Already Have a Payment Plan?
If you have already set up a payment installment plan, continue to make payments as outlined in your plan. If you have recently requested a payment plan that has not been approved yet, try to make payments on your account as you wait for your plan to be approved.
What If You Can't Afford to Pay the Bill on LT17?
If you cannot afford to pay the balance shown on your LT17 notice, you have a few different options. The IRS has an offer-in-compromise program where qualifying taxpayers can settle their balance for less than the amount owed. With an offer-in-compromise, you either pay off the settlement in a single lump sum or in installments over a short period of time.
Some taxpayers can qualify for currently uncollectible status on their accounts. If you can demonstrate severe financial hardship, the IRS will stop collection activity on your account. But you need to keep the agency updated on your status, and you will be expected to pay off your balance if your financial situation changes.
Qualifying for either of these options can be challenging, and you must provide the IRS with extensive details about your financial situation including your income, assets, and debts.
Why Are There Extra Costs on LT17?
You may notice that the tax due on LT17 is different from the amount shown when you originally filed your return. This can happen for several different reasons. If the IRS adjusted your tax bill, you should have been notified in a different notice.
All tax balances also incur penalties and interest. The only way to stop penalties and interest from accruing is to pay your balance in full. However, if you set up a payment plan, the IRS will reduce the rate of your interest and penalties.
Why Is There a QR Code on LT17?
In 2021, the IRS began placing QR codes on many of its notices, including the LT17. The QR codes are designed to help taxpayers, and when you scan them with your phone, they direct you to a relevant section of the agency's website.
Dealing With IRS Notice LT17
Dealing with the IRS can be scary, confusing, and time-consuming. The agency has a lot of power and its processes are often very complex. Luckily, you don't have to deal with the IRS on your own. You can get help from a tax professional who understands how to reduce balances, set up payment plans, apply for hardship status, appeal incorrect information, and more.
Don't let the IRS make your life uncomfortable. Instead, get high-quality help for your tax problems today. To get help dealing with notice LT17, contact a tax professional today.