IRS LT11 Notices (“LT11”) and Letters 1058. The IRS issues these particular “final” notices to taxpayers before it takes certain levy actions. Taxpayers must pay attention to these notices, as well as others, and understand their rights and responsibilities with respect to each.
This article discusses the LT11 and Letter 1058 and how a taxpayer should respond.
What is the LT11/Letter 1058?
The LT11 and Letter 1058 are alternative forms of IRS final levy notices. Generally, a taxpayer receives the LT11 or Letter 1058 from the IRS after receiving a series of prior notices—CP503, CP504, CP504B, etc. These notices are generally what stands between the IRS and seizing a taxpayer’s assets.
The LT11 prominently displays the following language at the top of page 1: Notice of Intent to Levy and Your Collection Due Process Right to a Hearing. Similarly, Letter 1058 includes the following language on page 1: Final Notice—Notice of Intent to Levy and Notice of Your Rights to a Hearing.
The IRS describes (1) the purpose of these notices, (2) what happens if a taxpayer does not respond, and (3) what kinds of property can be levied as follows:
What this notice or letter is about
We haven’t received your payment for overdue taxes. We intend to seize your property or rights to property. You must contact us immediately. . . .
What happens if I don’t respond to this notice of letter or don’t pay?
We can attach a levy to your wages or bank accounts up to the amount owed. We may also file a Notice of Federal Tax Lien. A lien is a public notice to your creditors that the government has a right to your interests in your current assets and any assets you acquire after we file the lien; it can affect your ability to get 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 with seriously delinquent tax debt. Additional information on passport certification is available at IRS.gov/passports.
What kinds of property can the IRS levy?
Property can include 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.
I.R.C. § 6331
The final levy notices are issued to taxpayers, pursuant to Section 6331 of the Internal Revenue Code. According to Section 6331(d)(1) and (2):
(d) Requirement of notice before levy
(1) In general
Levy may be made under subsection (a) upon the salary or wages or other property of any person with respect to any unpaid tax only after the Secretary has notified such person in writing of his intention to make such levy.
(2) 30-day requirement
The notice required under paragraph (1) shall be—
(A) given in person,
(B) left at the dwelling or usual place of business of such person, or
(C) sent by certified or registered mail to such person’s last known address,
no less than 30 days before the day of the levy.
Consequently, the IRS must issue a final notice of intent to levy at least 30 days before the levy occurs (assuming the collection of the taxes at issue is not in jeopardy).
Collection Alternatives & Due Process Rights
According to the LT11, Letter 1058, and Section 6331 of the Internal Revenue Code, levy actions can be stopped. A taxpayer can pursue certain collection alternatives, such as installment agreements and offers in compromise. While such installment agreements and offers are pending, no levy actions can occur. However, taxpayers may also request (and are entitled to) a hearing. Collection Due Process (“CDP”) hearings are crucial to taxpayers. Taxpayers have a right to a CDP hearing with the IRS Independent Office of Appeals before levy action is taken. According to the IRS, a “CDP hearing is an opportunity to discuss alternatives to enforced collection and permits you to dispute the amount you owe if you have not had a prior opportunity to do so.”
The LT11 and/or Letter 1058 is an unwelcome visitor to a taxpayer’s mailbox. The IRS uses charged language in such notices to solicit a response from taxpayers. Taxpayers need to know that they have the right to address levy notices, but timing is everything. Taxpayers have 30 days from the date of the LT11/Letter 1058 to protect themselves from levies against their property, income, bank accounts, etc. Taxpayers who receive a levy notice should consider contacting a tax advisor to determine the best course of action in responding to the LT11 and/or Letter 1058.