LT16 IRS notice: unpaid tax, missing returns and your next steps

What does the LT16 IRS letter mean?

An LT16 IRS letter is a collection notice. It tells you the IRS shows unpaid tax on your account, returns it expected but never received, or both, and it asks you to deal with them. The IRS says acting on it helps you avoid enforcement, which can include a levy or the filing of a notice of federal tax lien.

Unlike the CP501 and CP503 reminders, which deal only with a balance, an LT16 can also list returns you have not filed. That changes the order of what you must do first.

Missing returns listed on the LT16 IRS notice

If the letter lists missing returns, file them before anything else. The IRS will not set up an installment agreement for an individual who is behind on filing, so unfiled years block the cheapest way to pay.

1. Get your income records for each listed year with Get Transcript online or Form 4506-T, which shows W-2 and 1099 data the IRS already has.
2. Prepare each return on that year's forms. Past-due returns are filed the same way as on-time returns.
3. Send them to the address on the LT16, not the usual filing address, so they reach the unit handling your case.
4. If you already filed a listed return and more than 10 weeks have passed, send a signed copy of it to the IRS again.
5. If you believe you did not have to file for a year, call the number on the letter to explain before the IRS acts on it.

Filing old returns can also reduce what you owe. If the IRS has already prepared a substitute return from third-party data, your own return with deductions and credits usually replaces those figures. Our guide on how to file unfiled tax returns covers the process for several years at once, and a refund on any of them is only allowed within 3 years of the return due date.

Paying or setting up a plan after an LT16

Once every required return is on file, choose how to pay. The table below shows the main official options and what each costs.

Low-income applicants can have the direct-debit fee waived or reimbursed. Penalties and interest keep running on any plan until the balance is paid. Our IRS installment agreement page covers how monthly amounts are set.

Hardship options if you cannot pay

If paying anything would leave you unable to cover basic living costs, ask the IRS to delay collection. After reviewing a financial statement, usually Form 433-F, with proof of income, expenses and assets, it may mark the account Currently Not Collectible. The debt remains, interest continues, and a lien can still be filed, but active collection pauses.

If your income and assets make full payment unrealistic even over time, an offer in compromise settles the debt for less. It costs $205 to apply unless you meet the low-income certification, and the IRS only considers offers from people who have filed all required returns and made required estimated payments.

Is the IRS LT16 the same as a final notice

No. An LT16 does not give Collection Due Process hearing rights, and the IRS must still send a final notice of intent to levy, such as an LT11, Letter 1058 or CP90, at least 30 days before it levies.

If the tax is in doubt, you dispute the amount, or you cannot settle a disagreement, the IRS LT16 page says you can ask for a hearing with the Independent Office of Appeals; Publication 1660 explains the routes. Other letters that can arrive alongside an LT16 are listed in the IRS notices guide.