What the notice means
IRM 5.19.1 gives the letter's title as “LT16, Please Call Us About Your Overdue Taxes Or Tax Return.” The IRS LT16 page explains it this way: “If you received a simple LT16 notice, it’s because we’re trying to collect unpaid taxes from you and/or our files show we’re missing tax returns from you.” The page warns that action is needed to avoid enforcement, which can include seizing assets or wages and filing a Notice of Federal Tax Lien.
The LT16 is a contact letter. It does not meet the IRC 6330 requirement for a levy on most property; that requires the LT11 or an equivalent CDP notice. But it comes from the same ACS inventory that issues levies, so it should be read as the last soft contact.
Why the client got it
ACS uses the LT16 to get the taxpayer on the phone, often for one of these reasons:
- The account has a balance due that went through the notice stream (CP14 through CP504) without resolution.
- The IRS shows unfiled returns. The IRS page says to read the notice to identify which returns are missing, possibly for several years.
- ACS has a possible better address. IRM 5.19.4.3.4 tells employees that when an LT11 came back undelivered and a potential better address is found, they may “use OL16 to issue an LT16 to the new address” and, if there is no response by the follow-up date, “proceed with the levy determination.”
Deadlines and what happens if they pass
The LT16 does not start a statutory clock, and the IRS page does not state a response period. In practice ACS sets a follow-up date on the case (IRM 5.19.4.3.4 describes retaining the case for follow-up and then proceeding to the levy determination). The useful deadlines are the ones attached to other notices on the account: any open CDP window from an LT11, and the refund statute for unfiled years. The IRS page notes that to receive a refund, “you must file a delinquent return within three years of the original return due date, or within two years of the date you full paid the tax, if applicable.”
The IRS page also says a payment made within the last 21 days may not have posted: “If you paid your balance in full within the last 21 days, please disregard the LT16 you received.”
How to respond
- Get authorized (Form 2848) and pull account and wage and income transcripts for every open year, including years with no return on file. See transcripts for practitioners.
- Identify the missing returns. IRM 5.1.11.7.1 says filing requirements are normally enforced for six years under Policy Statement 5-133, though the taxpayer may file for all open periods. Confirm which years ACS is asking for before preparing anything.
- If the client says a return was filed, the IRS page says that if more than 10 weeks have passed, send a signed copy again; if the return was wrongly reported as missing, call the number on the notice.
- File the missing returns. The IRS page says the taxpayer must be current on filing to apply for an installment agreement.
- Address the balance: full payment, an installment agreement (the IRS page says balances under $50,000 may qualify for the Online Payment Agreement tool), currently not collectible status, or an offer in compromise.
- Call ACS with the returns filed or ready, the financial picture prepared, and a specific resolution to propose. Ask ACS to note the account while returns are processed.
If the client has a hardship, the IRS LT16 page says the IRS may report the account as currently not collectible, but penalties and interest continue and the debt does not go away. Be ready to document income, expenses and assets.
What the IRS does next
If there is no response by the follow-up date, ACS moves to a levy determination (IRM 5.19.4.3.4). If no CDP notice has been issued for the modules, ACS issues an LT11 first; IRM 5.19.4.3.1 says that after an LT11 the case is reassigned with a 53-day follow-up to issue a levy as the next action. ACS may also file a Notice of Federal Tax Lien (see federal tax liens). For unfiled years, unresolved return delinquencies can go to the Automated Substitute for Return program; see the CP59 page. Some accounts are assigned to private collection agencies instead.
Related notices
- LT11: the ACS CDP levy notice.
- CP504: the notice of intent to levy that usually precedes ACS.
- CP59: the first request for a missing individual return.
- CP71: the annual reminder for unpaid balances.
Questions practitioners ask
Is an LT16 a final notice?
No. It is a request to call. A levy on most property still requires the IRC 6330 CDP notice, which ACS sends as an LT11. But the account is in ACS inventory and enforcement can follow quickly after the follow-up date.
Can we file the missing returns instead of calling?
Filing is usually the first step, and the IRS page says to file as soon as possible. Calling lets ACS note the account and discuss the balance; the IRS page says to call if a return was wrongly reported as missing.
How many years of returns will the IRS require?
IRM 5.1.11.7.1 says enforcement of filing requirements is normally pursued for six years under Policy Statement 5-133, with managerial approval needed for more or fewer.
We paid last week. Is the LT16 still a problem?
The IRS page says to disregard the LT16 if the balance was paid in full within the last 21 days. Partial payments do not resolve the account.