You May Soon Receive a Collection Letter From the IRS
With tax season upon us, the IRS is also stepping up efforts to collect late payments from the past few years. As the Detroit Free Press reports , IRS letters known as LT38 notices will be sent to the mailboxes of more than 3.7 million taxpayers in the coming months. LT38 is an automatic tax collection notice that informs consumers of their tax balance and provides instructions on how to repay what they owe. The agency suspended mailing reminders in February 2022 due to a backlog of returns related to the pandemic.
Taxpayers with tax debt initially receive a CP14 , which provides notice of the unpaid balance, followed by mail reminders every five weeks. You may have received the first letter several years ago before the IRS suspended subsequent notices, so don’t be surprised if LT38 shows up now.
How to Respond to an IRS Collection Notice
Firstly, don’t panic if you get an LT38 – it’s not an inspection notice. However, you shouldn’t ignore it either. Read the letter carefully, and if you are hiring a qualified professional to do your taxes , be sure to include the notice with the rest of your documents.
There are several important steps that may be required:
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Report any outstanding returns . If the notice contains missing tax returns from previous years, complete them as soon as possible.
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Pay the outstanding balance . If you have tax debt, settle it to avoid interest and penalties accruing. The IRS has many ways to pay your bill online . If you cannot pay the full amount, you may be eligible for a payment plan or a temporary deferment in receiving payments.
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Dispute any errors . If you think you received the notice in error or that the information on it is incorrect, contact a real person at the IRS . You will need to collect relevant documentation, such as copies of filed returns and proof of payment.
The IRS is now waiving some penalties for failing to pay taxes for the 2020 and 2021 tax years, but those fees will be collected starting April 1st.
Remember that the IRS will not contact you via email or text message about your refund or outstanding balance, so do not open these messages or click the links —they are a scam . If you received the notice by mail, you can find the code on the IRS website to learn more about next steps.