IRS LT38 Collections 2024: Understanding the Resumption Notices

IRS Waives PenaltiesThe Internal Revenue Service (IRS) has recommenced the distribution of collection notices to taxpayers, marking a continuation of its automated reminder system. These notifications, which resumed dispatch in January, are being sent via regular postal service on a phased basis over the forthcoming months, targeting an audience of over 3.7 million taxpayers within the IRS automated collection framework.

IRS LT38 Collections 2024

Luis Garcia, a spokesperson for the IRS based in Detroit, emphasizes the importance of recipients carefully reading the notice upon receipt. For any queries or concerns, individuals are encouraged to directly contact the IRS by utilizing the contact number provided on the notice itself.

It’s crucial to understand that these letters, identified as “LT38 Notices” by the IRS, do not signify an impending audit. Instead, they serve to update taxpayers on their outstanding balances and to outline available options for resolving any due debts. This initiative is part of the IRS’s efforts to resume its routine reminders following a temporary suspension of collection notices due to the pandemic. The LT38 Notice also informs recipients that if they have settled their outstanding balance within the past 21 days, they can disregard the notice.

What to Do If You Receive an LT38 Notice from the IRS

The hiatus in sending these reminders was initiated in February 2022 as the IRS navigated the challenges brought about by pandemic-related disruptions. This break was primarily to allocate resources towards addressing the backlog of unprocessed tax returns and related correspondences. Taxpayers who find themselves in receipt of these notices are likely encountering such communication for the first time in two years, potentially leading to surprise or concern due to the absence of such reminders during the interim period.

“It’s crucial to carefully review the LT38 notice upon receipt,” states Mike Lotito, President at Lotito & Lazzara CPA. “If there are uncertainties or concerns, the contact number provided on the notice is your best resource for clarification, or bring it to us to review.”

Navigating IRS Notices, Discrepancies, and Payment Options

For individuals navigating their tax matters without professional assistance, the importance of meticulously reviewing financial records cannot be overstated, particularly for the tax years spotlighted in the IRS notice. The unique challenges introduced by the COVID-19 pandemic have led to unprecedented disruptions, making it more critical than ever to ensure accuracy in one’s tax filings and payments. Any discrepancies or disputes regarding the IRS’s claims must be addressed without delay. Engaging with the IRS directly, via the contact information provided on the notice, allows taxpayers to confirm how their payments have been allocated and to challenge any perceived inaccuracies, armed with the requisite documentation to support their case.

The notice from the IRS does more than just inform taxpayers of their outstanding balance; it also outlines available payment methods and details any penalty relief for which they may be eligible. To mitigate the impact of additional interest and penalties, taxpayers are urged to contribute any amount they can towards reducing their debt. Recognizing that not all taxpayers are in a position to pay their balance in full, the IRS has made provisions for various payment plans and installment agreements. These options are thoroughly detailed on the IRS’s official website, providing a lifeline for those in financial distress.

Moreover, the IRS has significantly improved access to self-service tools and online payment solutions, simplifying the process for taxpayers to manage and resolve their tax liabilities. These digital platforms offer a convenient and efficient means for individuals to set up payment arrangements, submit necessary documentation, and keep track of their tax account status, all without the need to speak directly with an IRS representative. This evolution in taxpayer services not only enhances the user experience but also empowers taxpayers to take control of their financial obligations in a more manageable and less daunting manner.

IRS Waives Penalties for 2020 and 2021 Tax Filings to Ease Pandemic Financial Strain

In a significant move, the IRS announced in December that it would waive certain failure-to-pay penalties for eligible taxpayers for the tax years 2020 and 2021, a measure expected to benefit approximately 5 million tax filings. This penalty relief, potentially amounting to $1 billion, aims to alleviate the financial strain on individuals and entities impacted by the pandemic, particularly benefiting those with annual incomes below $400,000. It’s noteworthy that this relief is automatic, requiring no action from eligible taxpayers, with refunds or credits being processed for those who qualify. If you are a non-profit and received a letter, it’s best to get that to us to review asap.

This development is part of the IRS’s broader strategy to support taxpayers during challenging times, ensuring that the process of managing and resolving tax liabilities is as streamlined and accessible as possible. Taxpayers are reminded of the ongoing accumulation of interest on unpaid taxes, with the IRS clarifying that the waiver applies solely to the failure-to-pay penalty, not to the underlying tax debt or interest.