Receiving an IRS Notice LT11 can be alarming, but understanding what it means and how to respond can help you avoid serious financial consequences. The Notice LT11 is the IRS’s last warning before it takes collection actions such as garnishing wages, freezing bank accounts, or seizing assets. If you fail to act within 30 days, the IRS can move forward with these aggressive measures.
The good news is that you have options. When you receive a Notice LT11, you can negotiate with the IRS, file for a Collection Due Process Hearing, set up an IRS payment plan, or get a professional to take on your case.
At Victory Tax Lawyers, we specialize in tax relief, helping our clients minimize their tax liabilities while making sure they stay compliant with IRS rules and programs. We assess your case, identify the best course of action, and handle the entire process while keeping you informed. Take advantage of our free consultation today and speak with one of our tax lawyers.
In this guide, we’ll explain everything you need to know about IRS Notice LT11, including what it is, what happens if you ignore it, and the best steps to take when you receive one.
What Happens if You Ignore IRS Notice LT11?
Notice LT11 serves as a final notice of intent to levy. In simple terms, it is the IRS’s final warning. Ignoring IRS Notice LT11 can result in serious trouble for you. Particularly, you risk triggering aggressive collection efforts from the IRS and, in many cases, asset seizure. This is why promptness matters a lot when dealing with the IRS, as delays can make it harder to fix the issue. Here is a summary of what may likely happen if you leave Notice LT11 unattended:
1. Bank Account Levy
If you ignore IRS Notice LT11, they can reach out to your bank and freeze whatever funds or assets are held in your account. As soon as they place a tax levy, you get 21 days to resolve the issue before your bank sends the money to the IRS. You can use this time to reach out to the IRS and set up a payment plan to cover your taxes. However, if you fail to take any action, the IRS will go ahead and seize your funds, potentially resulting in bounced checks, overdrafts, and financial strain.
2. Wage Garnishment
If you’re new to the concept of wage garnishment, this is an IRS collection procedure that gives your employer the right to withhold a portion of your paycheck. The portion that is withheld is then sent directly to the IRS to satisfy your seriously delinquent tax debt. In many cases, the IRS garnishes a larger portion of a taxpayer’s wages, leaving them with only a minimal amount to survive on.
Unfortunately, unlike some creditors who must first get a court order before garnishing wages, the IRS doesn’t need a court order to garnish your wages. They can continue to garnish your wages until you clear the tax debt or set up a payment plan.
3. Seizure of Property
Similar to wage garnishment, seizure of assets is another extreme measure the IRS takes to recover the money owed in taxes. After several unanswered IRS letters of due taxes, the IRS may resort to seizing your valuable assets, such as your home, car, land, and other valuable properties. The idea is to sell off these properties to recover the money you owe in taxes unless you take action outright to stop the levy. The IRS will need to get court approval in the case of seizing a taxpayer’s property.
4. Federal Tax Lien
If you ignore the LT11 notice, the IRS may file a federal tax lien against you. A tax lien allows the government to legally claim your property, including personal property, financial assets, and real estate, when you fail to pay your tax debt. People often mistake a tax lien for a tax levy. They aren’t necessarily the same, although they’re quite similar.
A lien is simply a legal claim on your property, meaning the government marks your property as collateral, whereas a levy results in the immediate seizure of your property to satisfy your tax debt. If you sell your property during the period when the lien is still active, the IRS is allowed to take the proceeds to cover your debt. A tax lien will also generally make it almost impossible to access loans or new credit lines, as it dents your credit score.
5. Additional Penalties & Interest
The longer you ignore an IRS LT11 notice, the more your balance will increase due to increasing penalties and interest. The IRS applies failure-to-pay penalties, which are generally 0.5% of the unpaid taxes per month, up to a maximum of 25% of the total debt. Additionally, interest compounds daily on the outstanding balance, making it even more challenging to pay off.
6. Offset of Tax Refunds
Ignoring an LT11 IRS notice affects your government benefits. If the IRS finds out that you’re expecting a tax refund in the future, they could wait for you at that junction through a process known as the Treasury Offset Program. This program acts as a debt collection tool by enabling the government to collect government-issued payments, such as state tax refunds or Social Security benefits, from taxpayers owing delinquent debts.
If you owe back taxes and ignore an LT11 IRS letter, your refunds may be intercepted and applied towards your tax debt. This simply means that even if you successfully escape wage garnishment or direct levies, the IRS can still withhold your government-related benefits to satisfy your tax debt.
7. Possible Passport Revocation
If your tax debt exceeds $62,000 (as of 2024), the IRS may notify the U.S. State Department. When this happens, it can result in the denial, revocation, or restriction of your passport. This can cause serious issues for individuals who travel quite often for work or other personal reasons.
What to do When You Receive Notice LT11
When you receive IRS Notice LT11, we recommend that you take immediate action to prevent the IRS from initiating aggressive collection actions such as levies, garnishments, or property seizures. Here are a few steps to take when you receive an LT11:
- Read the Notice Carefully – Go through the notice thoroughly to understand the details of your tax debt, the amount owed, and the deadline for response. Bear in mind that the 30-day deadline takes effect from the date the notice is issued, and missing this deadline can significantly limit your chances of having a successful appeal.
- Verify the Tax Debt – The next thing you want to do is make sure that the tax amount listed is accurate. You can verify this amount by reviewing your previous tax returns, IRS account statements, or by logging into your IRS Online Account. If you believe there’s been an error somewhere, contact the IRS right away to dispute the amount or request more details about the assessed debt.
- Request a Collection Due Process (CDP) Hearing – If you disagree with the tax debt or need more time to resolve the issue, you can file a request for a CDP hearing with the IRS within 30 days of receiving LT11. In the hearing, you’ll be able to dispute the levy, negotiate a settlement, or request alternative payment options before the IRS takes further action. Make the request by completing Form 12153.
- Take Advantage of Payment Options – If you acknowledge the debt and want to avoid a levy, consider one of the available payment options:
- Pay the tax debt in full: If you’re able to, consider clearing off your full tax bill at once. Doing so immediately stops any further collection actions.
- Set up a payment plan: If you cannot pay in full, you can set up a payment plan/ installment agreement with the IRS. An installment agreement prevents levies as long as you make your payments on time.
- Apply for an Offer in Compromise (OIC): An Offer in Compromise is an IRS tax relief program that allows delinquent taxpayers who cannot afford to pay their tax debt in full to settle for a reduced amount based on their financial situation.
- Submit a CNC request: Another option worth considering if you’re facing severe financial hardship and you qualify is the Currently Not Collectible (CNC) Status. This option is available to taxpayers who are unable to pay their debt or who cannot pay without experiencing significant hardship in managing their basic living expenses. The CNC status doesn’t clear taxes owed. It only temporarily halts IRS collection actions until the taxpayer’s finances improve.
- Communicate with the IRS – Ignoring LT11 will create bigger problems. If you need extra time to organize your financial records or review your options, be sure to call the IRS at the number listed on the notice. They might give you an extension or help you figure out a solution before they move forward with a levy.
- Seek Professional Help – If you are not sure how to go forward or if your tax situation seems too complex to handle on your own, you should consider getting assistance from a tax professional. They are better equipped to help you navigate IRS procedures, file appeals, negotiate settlements, and protect your personal and business assets from levy actions.
- Monitor Your IRS Account and Follow Up – After taking action, regularly check your IRS account online or follow up with the IRS to confirm that your payment plan, appeal, or other resolution is processed correctly. Keep copies of all correspondence, payment receipts, and agreements for your records.
How Victory Tax Lawyers Can Help With IRS LT11 Notice
If you have received IRS Notice LT11, don’t wait until the IRS takes action. Victory Tax Lawyers can help you explore your legal options, negotiate with the IRS, and protect your financial future. Here’s how our experienced tax professionals can assist you with LT11:
Our team will carefully review your LT11 notice, tax records, and financial situation to determine the best course of action. We will verify the accuracy of the IRS’s claim, assess any penalties or interest applied, and confirm that you are not being unfairly targeted for collection.
If necessary, we will help you file a Collection Due Process (CDP) hearing to halt IRS enforcement actions while we help you negotiate a resolution. If we think there’s a possibility that your wages may be garnished or levied, we will work with you to prevent this from happening. If the IRS has already seized your funds, we’d help you negotiate with the IRS to have their decision recalled by proving either financial hardship or IRS procedural errors.
If you are unable to pay your tax debt in full at a go, our team can help you negotiate an Installment Agreement. If your finances are a mess and paying your tax debt will result in you being worse off, we can help you apply for an Offer in Compromise (OIC) or Currently Not Collectible (CNC) status. If you’ve racked up penalties over the course of your tax debt delinquency, we can negotiate a penalty abatement with the IRS. This reduces or, in some cases, even totally removes penalties that have been applied to your tax balance, thereby significantly lowering your total liability and making it easier to repay your tax debt.
Need an Experienced Tax Attorney?
Ignoring IRS levy notices, particularly the IRS Notice LT11, is a bad move any time, any day. You risk having your wages garnished, your bank account levied, and even your personal property being seized. You can, however, avoid all these by taking action within 30 days. By being prompt in your response, you can stop the IRS from moving forward with aggressive collection measures.
Luckily, you have a plethora of options to choose from, depending on what works best based on your current financial situation. You can choose to set up a payment plan, request an Offer in Compromise, or dispute the tax debt. Acting quickly is the key to protecting your finances.
If you’re unsure of the best approach, Victory Tax Lawyers is here to help. Our experienced tax attorneys can review your case, communicate with the IRS on your behalf, and negotiate the best possible resolution. Don’t wait until it’s too late; book a free consultation with Victory Tax Lawyers today and take the first step toward resolving your tax issue with confidence.
FAQ
Will LT11 affect my credit score?
While LT11 itself does not appear on your credit report, failure to act can lead to a federal tax lien, which can negatively impact your credit and financial standing. A lien can make it difficult to get loans, refinance property, or secure new lines of credit.
What happens if I ignore Notice LT11?
When you ignore Notice LT11, the IRS obtains the power to seize your wages and other personal assets, as well as freeze your bank accounts. Taking immediate measures increases your chances of obtaining a favorable resolution.
Can I negotiate with the IRS myself?
Direct communication with the IRS is possible, but your success rate improves when you work with our experienced tax attorney. Handling tax matters can be tricky owing to the vast and complex nature of the tax law and code. A little mistake can get you stuck, leading to unnecessary delay, or even result in penalties.
Can my passport be revoked because of LT11?
Yes, the IRS can revoke your passport if it certifies your unpaid taxes as “seriously delinquent.” Typically, if your tax debt exceeds $62,000 (as of 2024), the IRS can ask the U.S. State Department to revoke your passport. However, if the IRS sees that you’re making a good-faith attempt to settle your overdue taxes, it won’t take this path.
What is the difference between LT11 and CP504?
Both are IRS collection notices, but they serve different stages in the process. CP504 (Notice of Intent to Levy) is an early notice stating the IRS intends to levy your assets. If you ignore it, the IRS then sends LT11, the final notice of intent to levy. It’s only after notice LT11 has been sent that the IRS takes action on your assets.
