IRS Letter LT11 is a pivotal notice in the IRS collection process. Officially called the “Final Notice of Intent to Levy and Notice of Your Right to a Hearing,” it serves as the IRS’s formal warning that they plan to seize your assets or income to satisfy outstanding tax debts. Importantly, the letter also informs you of your right to challenge the proposed levy through a Collection Due Process (CDP) hearing, giving you a valuable opportunity to explore payment alternatives or dispute the debt.
Why You Receive IRS Letter LT11
You will typically receive an LT11 after ignoring or failing to respond to previous IRS notices such as the CP14 (tax bill) and subsequent reminder notices (like CP501 and CP503). The IRS uses this letter to notify you that unless you act within 30 days, they will begin to levy your wages, bank accounts, or other property to collect your unpaid tax balance.
How IRS Letter LT11 Fits into the Collection Process
The IRS must follow specific procedural steps before levying your assets. After assessing your tax liability and issuing initial bills and reminders, the LT11 letter signals the IRS’s intent to take serious collection action. The process typically follows these stages:
- Initial Tax Assessment: You file a tax return or the IRS assesses additional tax after an audit.
- Notice and Demand for Payment: IRS issues a formal bill, such as CP14.
- Reminder Notices: CP501 and CP503 urge you to pay or contact the IRS.
- Final Notice – LT11: Informs you that the IRS plans to levy within 30 days unless you respond.
- Actual Levy: If no payment or agreement is reached, the IRS can seize your assets or garnish wages.
The LT11 letter is the IRS’s last written notice before legal seizure of your property begins. Understanding this timeline is essential to avoiding enforcement actions.
What a Levy Means
A levy is a legal seizure of your property to satisfy a tax debt. It differs from a tax lien, which is a claim the government places on your property but does not involve taking possession. Levies can include:
- Bank Account Levies: The IRS can freeze and withdraw funds from your bank.
- Wage Garnishments: Your employer may be required to send part of your paycheck directly to the IRS.
- Social Security Benefits Levies: Up to 15% of your benefits can be withheld.
- Seizure of Other Assets: Including investment accounts, rental income, or personal property.
Who Can Receive IRS Letter LT11
Anyone with unpaid federal tax debt who has been unresponsive to prior IRS contact can receive LT11, including:
- Individual taxpayers with unpaid income, self-employment, or other taxes.
- Small businesses that haven’t paid payroll taxes or other business-related liabilities.
- Taxpayers subject to audit adjustments who have not resolved additional assessments.
Responding to IRS Letter LT11: Your Options
It is critical to respond promptly after receiving an LT11. You typically have 30 days to:
- Pay the Full Amount Owed: Paying in full stops collection and removes any potential tax liens.
- Set Up an Installment Agreement: Pay over time via a payment plan.
- Submit an Offer in Compromise: Settle your debt for less than owed if you qualify due to financial hardship.
- Request a Collection Due Process (CDP) Hearing: Appeal the levy and negotiate alternatives with the IRS Office of Appeals.
- Dispute the Liability: If you believe you do not owe the debt, provide supporting evidence or file an amended return.
Here are some pros and cons of these options:
| Option | Description | Pros | Cons |
|---|---|---|---|
| Pay in Full | Settle the debt entirely including all penalties and interest. | Stops levy and collection immediately. | Requires full lump sum payment. |
| Installment Agreement | Arrange monthly payments over several years. | Avoids levy; manageable payments. | Must qualify and comply strictly with terms. |
| Offer in Compromise | Negotiate reduced settlement based on inability to pay. | Can reduce debt significantly. | Hard to qualify; complex application process. |
| Collection Due Process Hearing | Appeal the levy with an independent IRS appeals officer. | Pauses levy; review and negotiation possible | Can be complex; might need experienced representation. |
| Dispute the Debt | Prove IRS error or amend tax returns. | May eliminate the debt if successful. | Requires strong documentation and attention to detail. |
Common Misconceptions
- LT11 Is a Scam: Genuine LT11 letters include correct IRS contact info and your tax details. To be sure, call the IRS directly using official IRS phone numbers.
- Ignoring LT11 Is Safe: Ignoring the letter can lead to bank levies, wage garnishments, and potential tax liens.
- No Money, No Options: Programs like “Currently Not Collectible” status or Offers in Compromise exist for hardship cases.
- Levy Means Jail: Levies are civil actions; jail is only for tax fraud or evasion, not unpaid taxes.
Frequently Asked Questions
Can the IRS really seize my bank account?
Yes, after issuing LT11 and without court involvement, the IRS can levy your bank accounts.
How long do I have to respond to an LT11?
You have 30 days from the date on the letter to respond or request a CDP hearing.
What is a Collection Due Process hearing?
It is an appeal hearing where you can contest the levy and propose alternative solutions.
What if I’ve already paid the tax claimed?
Provide proof of payment to the IRS immediately to avoid unnecessary levies.
Will IRS levies affect my credit score?
The letter itself doesn’t impact credit, but an IRS tax lien filing can harm your credit since it becomes a public record.
Helpful Resources
- For detailed IRS guidance, see IRS Publication 594 – The IRS Collection Process.
- Learn more about IRS levies in our IRS Collection Process article.
- Understand tax lien filings via Letter 3172 explanation.
- For bank levy specifics, check IRS Bank Levy Rules.
Responding promptly to an IRS Letter LT11 can prevent serious financial consequences. If you’re unsure what to do, consider consulting a tax professional who can help negotiate and protect your rights.