An LT11 Notice: Intent to Levy is a formal communication from the IRS signaling its intent to levy your assets to recover unpaid tax debts. This notice serves as a crucial warning before the IRS initiates actions such as garnishing wages, freezing bank accounts, or seizing other property. Understanding how the LT11 Notice works and your rights can help you avoid severe financial consequences.
Why Does the IRS Send an LT11 Notice?
When taxpayers fail to pay their taxes after receiving bills and reminders, the IRS escalates collection efforts. The LT11 Notice is a legally required notification sent before any levy or seizure action, ensuring taxpayers have at least 30 days to respond or make arrangements to pay.
How Does an Intent to Levy Work?
A “levy” means the IRS can legally seize your assets to collect owed taxes. Upon issuing an LT11 Notice, if you do not pay the debt or set up a payment plan within the warning period, the IRS has the authority to:
- Withdraw funds from your bank accounts
- Garnish your wages
- Levy certain federal payments like Social Security, in limited cases
- Take possession of valuable property such as vehicles or real estate
Typically, the IRS targets liquid assets like bank accounts and wages first, and only moves toward seizing property like a home if the debt remains unresolved.
Real-Life Example
Imagine you owe $5,000 in unpaid taxes and have ignored previous IRS notices. Receiving an LT11 Notice means the IRS plans to freeze your bank account if you do not act within 30 days. If you fail to respond, your bank funds may be transferred directly to the IRS to satisfy your tax debt.
Who Is Affected by LT11 Notices?
Any taxpayer with outstanding taxes who has not established a payment agreement can receive an LT11 Notice—this includes individuals, business owners, and corporations. Ignoring prior IRS communications increases the likelihood of this notice.
What Actions Can You Take After Receiving an LT11 Notice?
Receiving an LT11 does not mean immediate asset seizure. You still have several options to avoid or delay a levy:
- Pay the full tax amount owed: This stops collection efforts.
- Establish an installment agreement: Set up monthly payments with the IRS.
- Submit an Offer in Compromise: Propose to settle for less than owed if eligible.
- Request Currently Not Collectible status: Prove financial hardship to pause collection.
- Request a Collection Due Process hearing: Challenge the levy action legally.
Respond within the 30-day window on the notice to protect your assets.
Common Misconceptions About LT11 Notices
- Ignoring the LT11 notice can lead to inevitable asset seizure.
- The IRS usually does not seize your home first; levies generally target bank accounts and wages initially.
- The levy is not immediate upon receiving the LT11 letter; you have time to respond.
- You are not limited to paying the debt in full; negotiation options are available.
Tips to Prevent Receiving an LT11 Notice
- Respond quickly to any IRS correspondence.
- File all tax returns on time even if you cannot pay immediately.
- Contact the IRS to arrange payment plans.
- Keep your contact information current with the IRS.
- Consult a tax professional for guidance if you receive an LT11 or other IRS notices.
Collection Process Timeline After IRS Initiates Collection
| Step | What Happens | Timeframe | Your Action |
|---|---|---|---|
| Initial Tax Notice | IRS sends bill for unpaid taxes | Soon after tax due date | Pay or communicate with IRS |
| Final Notice (CP90/CP297) | IRS notifies intent to levy property | ~30 days after tax bill | Respond before levy action |
| LT11 Notice | Official intent to levy letter issued | At least 30 days prior to levy | Pay, negotiate, or request a hearing |
| Levy | IRS seizes assets (e.g., funds) | After LT11 period ends | Levy enforcement begins |
Frequently Asked Questions (FAQs)
Q: Does receiving an LT11 Notice mean immediate seizure?
A: No. It provides at least 30 days to respond before any levy action.
Q: Can the IRS levy Social Security benefits?
A: Usually, Social Security benefits are protected, except in limited cases involving federal tax debts.
Q: Can I negotiate after receiving an LT11 Notice?
A: Yes. Payment plans and Offers in Compromise are viable options.
Q: What if I never received an LT11 before a levy?
A: The IRS must send this notice; absence of it may provide grounds for appeal.
Sources
- IRS.gov: Notice of Intent to Levy
- IRS.gov: Understanding the IRS Collection Process
- Treasury.gov: IRS Levies
Receiving an LT11 Notice signals a critical moment to act on your tax debt before the IRS begins seizing assets. Taking timely steps can provide relief options and protect your financial resources.