IRS Law Blog

You just received IRS Notice LT16, warning that your unpaid taxes have been assigned for immediate enforcement action.

The letter gives you three options: (1) within 10 days, send a check to the IRS to pay your taxes, (2) call the IRS to make payment arrangements, or (3) face the prospect of an IRS levy on your wages and property.

Everything has been quiet on the IRS front for a while, but suddenly, now, it appears the IRS is getting ready to rear its ugly head.

Let’s get to the realities of the LT 16 letter, and your best responses to protect your property from an IRS levy.

First, the LT16 notice, standing alone, does not permit the IRS to levy your wages or seize your property.  Sure, the letter states that the IRS is getting ready to wipe you out, but IRS letters often threaten collection action that they cannot actually legally take.

Here’s the truth behind the LT16:  Before the IRS can levy your property, they must first send you a Final Notice of Intent to Levy, identified as Notice LT11.  An LT16 is not an LT11, and does not carry the same legal weight.

The IRS has been known to send the LT16 before the LT11.  When this happens – which could be your situation – the LT16 gives the IRS no power to levy.

In other words, the LT16 should be taken seriously, but is there any meat behind it?

After receiving an LT16, it is important to not blindly call the IRS out of fear, but to first determine if an LT11 was ever sent.

To know if an LT11 was sent, we would first review all the IRS letters you have received to determine if you have a Final Notice of Intent to Levy, distinguishing it from other similar IRS letters that appear to put you in jeopardy of levy but actually do not.

If you are unsure that you have all your IRS mail – or more importantly, just to be safe – we would contact the IRS and request transcripts, which would have internal IRS entries stating if the Final Notice of Intent to Levy was ever sent to you, and if so, when.

If a Final Notice of Intent to Levy was issued, we could still stop the IRS from levying by filing a Collection Due Process Appeal.  If filed within one year from the date of the LT11, these appeals not only prevent the IRS from levying, but also transfer your case from the IRS Collection Division to their Office of Appeals.  That means we are no longer negotiating with collection agents, but IRS Settlement Officers.

Also, it is important to recognize that the LT16 is often an indicator that the IRS is transferring your case from its Automated Collection Service to a local Revenue Officer.  Revenue Officers are the highest level IRS collection agents, work in your city, and often start a collection case investigation by making a visit to your home or office.

Because the IRS may be gearing up to transfer your case to a Revenue Officer, they should be contacted to confirm where your case is in their collection queue, and if the case is being assigned to a Revenue Officer. If a Revenue Officer is in your future, remember that the IRS still needs to send the LT11 to empower the RO to levy, and if it has been sent, you may have appeal rights to prevent financial hardship.

If Revenue Officer case assignment is pending, then now is the time to prepare, to be ready when the RO comes calling.  That means getting a head start in preparing financial statements, using IRS Form 433A or Form 433B, to demonstrate to the Revenue Officer how you can repay the taxes.  The Revenue Officer will want to see current income, monthly living expenses, a listing of assets, and written verification of debts.  After providing the financial statements, the Revenue Officer could place you into an installment agreement, process an offer in compromise, or determine that you cannot afford to pay the taxes back, and place your account in currently uncollectible status.

Steps should also be taken to ensure that you are in compliance with tax return filing requirements, and paying your current tax liabilities.  That, too, will be an early requirement of the Revenue Orficer.

Lastly, know that an LT16 is not sent by a human, but an IRS computer.  When an LT16 is sent, there is not an IRS agent shining a bright light on you, watching, waiting for your call, or getting ready to pounce on your assets.  That may come later, with assignment to a Revenue Officer and issuance of the LT11, but for now everything is tied to a computer.  Any immediate levy action is determined by the success of the IRS computer in trying to find information about your income from W2 and 1099 reporting.  In that regard, if the IRS has no information on your current income, or the information is old and outdated, your immediate levy risk is likely minimal even if an LT11 has been sent.

The IRS LT16 notice of pending enforcement gives us a heads-up that the IRS is getting ready to gear up, and that all may not be quiet on the IRS front for a while. But understanding your rights to protect your wages and property – and to know what’s coming and prepare – can help you make it through, reach resolution with the IRS, and get on with your life.