IRS LT11 Notices (“LT11”) and Letters 1058 are not to be taken lightly. The IRS sends these “final” notices to taxpayers before taking certain levy actions. Taxpayers must pay attention to these notices, as well as others, and understand their respective rights and responsibilities. Other notices described by our firm include: You Received an IRS CP518 Notice, Now What?, You Received an IRS CP504 Notice, Now What?, and You Received an IRS CP15 Notice (re: Form 3520 Penalty), What Now? This article goes over the LT11 and Letter 1058, as well as how a taxpayer should respond to them.
What exactly is the LT11/Letter 1058?
Alternative forms of IRS final levy notices include the LT11 and Letter 1058. In most cases, a taxpayer receives the LT11 or Letter 1058 from the IRS after receiving a series of previous notices—CP503, CP504, CP504B, and so on. These notices are typically what prevent the IRS from seizing a taxpayer’s assets.
The following language appears prominently at the top of page 1 of the LT11: Notice of Intent to Levy and Your Collection Due Process Right to a Hearing. Similarly, on page 1 of Letter 1058, the following language appears: Notice of Intent to Levy and Notice of Your Right to a Hearing—Final Notice
The IRS explains (1) the purpose of these notices, (2) what happens if a taxpayer does not respond, and (3) what types of property can be levied in the following ways:
What is the purpose of this notice or letter?
We have yet to receive your payment for past-due taxes. We intend to seize your property or property rights. You must contact us right away…
What happens if I do not respond to or pay this notice of letter?
We have the authority to attach a levy to your wages or bank accounts up to the amount owed. In addition, we may file a Notice of Federal Tax Lien. A lien notifies your creditors that the government has a right to your current assets and any assets you acquire after we file the lien; it may affect your ability to obtain credit.
You may also be subject to the Fixing America’s Surface Transportation (FAST) Act legislation, which generally prohibits the State Department from issuing or renewing a passport to a taxpayer who owes a significant amount of money to the IRS. More information on passport certification can be found at IRS.gov/passports.
What types of property may the IRS seize?
Wages and other income, bank accounts, business assets, personal assets (including your car and home), Alaska Permanent Fund Dividends and state tax refunds, and Social Security benefits are all examples of property.
Taxpayers receive final levy notices in accordance with Internal Revenue Code Section 6331. Section 6331(d)(1) and (2) state:
(d) Notice requirement prior to levy
Only after the Secretary has notified such person in writing of his intention to levy on his salary or wages or other property for any unpaid tax may a levy be made under subsection (a).
(2) 30-day time limit
The notice required by paragraph (1) must be—
(A) delivered in person,
(B) left at such person’s home or usual place of business, or
(C) delivered by certified or registered mail to the person’s last known address,
not less than 30 days before the levy date
As a result, the IRS must issue a final notice of intent to levy at least 30 days before the levy takes effect (assuming the collection of the taxes at issue is not in jeopardy).
Alternatives to Collection and Due Process Rights
Levy actions can be halted under LT11, Letter 1058, and Section 6331 of the Internal Revenue Code. Certain collection alternatives, such as installment agreements and offers in compromise, are available to taxpayers. There can be no levy actions while such installment agreements and offers are pending. 3 Taxpayers, on the other hand, can request (and are entitled to) a hearing. Hearings on Collection Due Process (“CDP”) are critical for taxpayers. Before levy action is taken, taxpayers have the right to a CDP hearing with the IRS Independent Office of Appeals. A CDP hearing, according to the IRS, “provides an opportunity to discuss alternatives to enforced collection and allows you to dispute the amount you owe if you have not previously had the opportunity to do so.” 4
The LT11 and/or Letter 1058 are unwelcome visitors to the mailbox of a taxpayer. In such notices, the IRS employs charged language to elicit a response from taxpayers. Taxpayers should be aware that they have the ability to address levy notices, but timing is everything. Taxpayers have 30 days from the date of the LT11/Letter 1058 to defend themselves against levies on their property, income, bank accounts, and so on. Taxpayers who receive a levy notice should consult with a tax professional to determine the best way to respond to the LT11 and/or Letter 1058.