Understanding the IRS LT38 Letter: What It Means and How to Respond

An LT38 letter from the IRS is not just a simple notification—it’s a warning that serious action could be on the horizon. If you’ve received this letter, it’s important to act quickly and strategically to protect your finances and assets. Let’s break down what the LT38 is, why you received it, and the steps you need to take next.

What Is an LT38 Letter?

The LT38 is an urgent notice from the IRS that informs you of their intent to take collection actions, such as a levy on your bank account or garnishment of wages, due to unpaid taxes. It’s typically issued when previous attempts to collect the debt have failed, signaling that the IRS is ready to escalate.

Why Did I Get This Letter?

The IRS sends an LT38 when:

• You have an outstanding tax balance that hasn’t been paid.
  
  
• Previous collection notices, like the CP501 or CP503, went unanswered.
  
  
• You’ve failed to address your tax debt or enter into a payment arrangement.

The LT38 isn’t a letter to ignore—it’s often a precursor to serious enforcement actions that can disrupt your financial life.

What Happens If I Don’t Respond?

If you ignore the LT38, the IRS can initiate:

• Bank Levies: They can seize funds directly from your bank account.
  
  
• Wage Garnishment: A portion of your paycheck may be withheld to cover your tax debt.
  
  
• Asset Seizure: In extreme cases, the IRS can seize property, including real estate and vehicles.
  

What Should I Do If I’ve Received an LT38?

Here’s a step-by-step guide to handling the LT38 letter:

1. Review the Letter Thoroughly
   Read the notice carefully to understand the amount owed, the due date, and the type of taxes involved. The letter will also explain the next steps the IRS may take if you don’t respond.
   
   
2. Verify the Accuracy
   Compare the information in the LT38 to your own tax records. Mistakes do happen, so ensure that the balance and details are correct.
   
   
3. Contact the IRS Immediately
   Time is of the essence. Call the number provided in the letter to discuss your options and avoid immediate enforcement actions.
   
   
4. Explore Payment Options
   Depending on your financial situation, you may be able to:
   
   
   • Set Up an Installment Agreement: Pay your debt over time in manageable monthly payments.
     
     
   • Apply for an Offer in Compromise (OIC): Settle your debt for less than the full amount owed if you qualify.
     
     
   • Request Currently Not Collectible (CNC) Status: Temporarily delay collection efforts if you’re facing financial hardship.
     
     
5. Hire a Tax Resolution Professional
   IRS negotiations can be overwhelming, especially when the stakes are high. A tax professional can help you navigate the process, negotiate on your behalf, and protect your rights.
   
   

Key Takeaways

• The LT38 letter is a final warning from the IRS before they take aggressive collection actions.
  
  
• Ignoring this notice can lead to levies, garnishments, or asset seizures.
  
  
• Acting quickly and seeking professional help can prevent further damage and lead to a workable solution.
  
  

Don’t Face the IRS Alone

If you have an IRS problem, you have a legal problem, and if you’ve received an LT38 letter, you don’t have to handle it on your own. 

At McCauley Law Offices, we specialize in helping individuals and businesses resolve serious IRS issues, including levies and wage garnishments. 

Call us today for a free consultation, and let us help you take control of your tax situation before it escalates further.