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IRS Notice LT16: What It Means and What to Do
Short answer: An LT16 is an IRS notice saying it is trying to collect unpaid taxes from you, that its files show you are missing tax returns, or both. The IRS says you need to act to avoid enforcement, which can include seizing assets or wages. All State Tax Resolution, led by Sabih Shafi, an Enrolled Agent, prepares missing returns and sets up the payment option that fits, so you can answer the notice with everything in order.
Key takeaways
The IRS says an LT16 means it is collecting unpaid taxes and/or its files show you are missing returns.
Following the instructions on the notice may stop enforcement action. Ignoring it can lead to seizure of assets or wages, or a federal tax lien.
You must be current on your filings to apply for an installment agreement, so missing returns come first.
A payment can take up to 21 days to post. If you paid in full in the last 21 days, the IRS says to disregard the LT16.
If you cannot pay, the IRS lists a payment plan, hardship status, and an Offer in Compromise.
What an LT16 is
The IRS says that if you received a simple LT16 notice, it is trying to collect unpaid taxes from you, or its files show it is missing tax returns from you. Both can apply at once, and the notice tells you which.
The IRS says it is essential to take action to avoid enforcement action. That can include seizing your assets or wages, and filing a Notice of Federal Tax Lien, which could affect your credit score and ability to borrow. The IRS says following the instructions on your notice may stop enforcement action.
What the IRS tells you to do
Read your notice carefully. It identifies the problem.
File missing returns as soon as possible, if the notice lists any.
Pay your unpaid balance. Interest and applicable penalties stop being added as soon as you pay in full.
If you cannot pay in full, pay as much as you can now and set up an installment agreement for the rest. You must be current on your filings to apply.
If you are in financial hardship, the IRS says there are options, covered below.
If you disagree, you have appeal rights, covered below.
If the notice says you have missing returns
Read the notice to see which returns the IRS does not have. You may need to file for several years. The IRS says to file them as soon as possible. The IRS lists a summons among its enforced collection actions, used to get the information needed to prepare unfiled returns.
Here is what the IRS says about three common questions:
I already filed. If it has been over 10 weeks since you sent the return, send a signed copy again. If one or more returns were wrongly reported as missing, call the toll-free number on the notice.
I do not think I need to file. Use the IRS tool "Do I need to file a tax return?" to check the filing requirements for the years involved. If the tool says you are not required to file but the notice says you are, call the number on the notice.
I am due a refund. You may still be required to file. To get the refund, you must file a delinquent return within three years of the original due date, or within two years of the date you fully paid the tax, if applicable.
If you are missing a W-2, 1099 or similar form, the IRS says you can get your tax records, including wage and income statements, online or by mail. We often start unfiled years from those records.
If the notice says you owe a balance
Paying in full stops enforcement and may prevent additional interest and penalties. If you cannot pay in full, pay what you can now. Any payment lowers the interest and penalties added to the rest later.
The IRS says you can apply online for a long-term payment plan if you owe $50,000 or less in combined tax, penalties and interest and have filed all required returns. For a short-term plan of 180 days or less, the limit is less than $100,000. If you cannot apply online, call the toll-free number on your notice, or mail Form 9465, Installment Agreement Request.
Two timing rules help:
Payments can take up to 21 days to post. If you paid in full within the last 21 days, disregard the LT16.
If you already have an approved installment agreement, keep making payments under it. If you applied but are not yet approved, pay as much as you can now.
If you cannot afford to pay
The IRS describes two hardship paths.
Currently not collectible. If you cannot pay any of the tax because of hardship, the IRS can report the account as currently not collectible and temporarily delay collection until your finances improve. It says this does not stop penalties and interest, and it does not make the debt go away. Be ready to discuss your income, expenses and assets, and the IRS may ask for proof.
Offer in Compromise. In certain circumstances, an offer lets you settle for less than the full amount you owe. The IRS says it may be a legitimate option if you cannot pay in full, or if doing so creates a financial hardship. It offers a pre-qualifier tool to check.
Penalties and interest
The IRS says it generally charges penalties when you do not pay your tax in full by the return due date, usually April 15, or when you have not made sufficient estimated tax payments. Interest on the total amount you owe generally begins to be charged daily from the return due date.
If you do not pay in full by the payment due date in any notice, even with a pending or approved installment agreement, more interest and penalties are added until the balance is paid. You may qualify for relief from penalties if you made an effort to comply but could not meet your obligations because of circumstances beyond your control.
Your appeal rights
The IRS says that if the tax is in doubt, you dispute the amount, or you cannot resolve a disagreement, you are entitled to a hearing with the Office of Appeals. Publication 1660, Collection Appeal Rights, explains how. You can also call the toll-free number on your notice.
Special situations have their own tracks. If you are a victim of fraud or identity theft, the IRS points you to its identity theft guide for individuals. In certain cases, a spouse can be relieved of tax, interest and penalties on a joint return. The IRS calls this innocent spouse relief.
If your problem is causing a hardship, or you have tried and cannot resolve it, the Taxpayer Advocate Service is an independent organization within the IRS. You can reach it at 877-777-4778.
How we help
I am Sabih Shafi, an IRS Enrolled Agent. We work with clients nationwide and abroad, by phone and video, in English or Spanish.
Missing returns: we prepare and file the missing years.
Balance review: we check what the IRS says you owe, year by year.
Payment options: we request the plan, hardship status, or Offer in Compromise that fits.
Representation: with a signed Form 2848, the IRS can talk to me instead of you.
A flat fee quoted in writing before work starts.
Frequently Asked Questions
What is an LT16 notice from the IRS?
It is a notice the IRS sends when it is trying to collect unpaid taxes, or when its files show you are missing tax returns. The IRS says it is essential to take action to avoid enforcement.
Is an LT16 a final notice of intent to levy?
The IRS describes the LT16 as a notice that warns of enforcement action if you do not respond. It does not call it a Final Notice of Intent to Levy. Read your notice for any deadline or hearing right it states.
Do I have to file every missing return?
The IRS says to read the notice to identify which returns are missing, and to file them as soon as possible. If you think you were not required to file, check with the IRS tool and call the number on the notice if it disagrees.
Can I set up a payment plan with returns still missing?
Not an installment agreement. The IRS says you must be current on your filings to apply for one. That is why the missing returns come first.
What if I already filed the return the IRS says is missing?
If it has been over 10 weeks since you sent it, send a signed copy again. If a return was wrongly reported as missing, call the toll-free number on the notice.
Will the IRS take my paycheck if I ignore an LT16?
The IRS says enforcement can include seizing assets or wages, and filing a federal tax lien. Do not wait to find out. Respond, and ask what your options are.
General information, not tax advice for your situation.
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Talk to an Enrolled Agent
This article is general information, not individual tax advice. If you want to talk through your own IRS or state balance, book a free 20-minute review or call or text us directly.
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