With tax season kicking into high gear, the IRS is also ramping up its efforts to collect outstanding payments from the last few years. As the Detroit Free Press reports, IRS letters known as LT38 notices are headed for the mailboxes of more than 3.7 million taxpayers in the coming months. The LT38 is an automated collection notice to update consumers about their tax balances and provide instructions for resolving the debt. The agency suspended these mailed reminders in February 2022 due to the pandemic-related return backlog.
Taxpayers with tax debt initially receive a CP14, which provides notice of an unpaid balance, followed by mailed reminders every five weeks. You may have gotten the first letter a few years ago before the IRS suspended follow-up notices, so don’t be shocked if an LT38 shows up now.
How to address an IRS collection notice
First, don’t panic if you receive an LT38—it is not a notice of an audit. That said, you also shouldn’t ignore it. Read the letter carefully, and if you hire a qualified professional to do your taxes, make sure you include the notice with the rest of your documents.
There are a few important steps that may be required:
File any outstanding returns. If the notice lists missing tax returns from past years, complete them as soon as possible.
Pay your outstanding balance. If you have tax debt, resolve it to avoid interest and penalties adding up. The IRS has numerous ways to pay your bill online. If you can’t pay in full, you may be eligible for a payment plan or a temporary delay of collection.
Dispute any errors. If you think you received the notice by mistake or that the information in it is incorrect, contact a real human at the IRS. You will need to collect relevant documentation, such as a copy of filed returns and proof of payment.
The IRS is currently waiving some failure-to-pay penalties for tax years 2020 and 2021, but those fees will be charged starting April 1.
Remember, the IRS will not contact you via email or text about your refund or outstanding balance, so do not open these messages or click any links—these are scams. If you receive a mailed notice, you can search the code on the IRS website to learn more about next steps.
