What IRS LT36 Notices Mean & What To Do Next

If you’re a federal employee and just received this IRS LT36 notice from the IRS, take a deep breath and don’t panic. While this notice is serious, it’s not insurmountable. And know that you’re not alone. In fact, many federal employees and retirees have received this notice, and while the letter might feel alarming, understanding what it is – and how you should respond – is key to resolving the issue and protecting your career.

It’s not a scam or random warning; it’s an official communication from the IRS about unpaid taxes. The good news? By taking quick, deliberate action, you can address it and move on.

Key takeaways

• LT36 – compliance notice sent to federal employees and retirees.
• What it means – get back into compliance or risk facing IRS enforcement actions.
• How to respond – figure out if you need to file, set up payments, or take other action to get into compliance.

What Is an IRS LT36 Notice?

An IRS LT36 notice is essentially the agency’s way of saying, “We’ve tried other ways to collect what you owe, and now we’re considering more serious action.” Specifically, this notice tells you that the IRS may contact your employer about your tax delinquency.

For federal employees, this notice carries extra weight. The government takes a dim view of its own employees having unresolved tax issues. Receiving an LT36 notice means you risk your employer — the federal government — learning about your tax problems. Getting this notice can also trigger an additional concern if you’re a federal employee. If unpaid taxes are reported internally, your job security or clearance status may be affected.

The IRS doesn’t send this notice out of the blue. It’s part of a concerted effort to ensure tax compliance among government employees. The IRS works with your employing agency to identify anyone who has unfiled tax returns or unpaid tax debts as part of the Federal Employee/Retiree Delinquency Initiative (FERDI).

Although the LT36 is a relatively new notice, the FERDI program has been around for decades. Typically, the LT36 notice is triggered when someone has ignored previous, less-urgent notices. Although this is not a Final Notice of Intent to Levy, it’s a clear escalation and final warning, before the IRS takes more serious collection actions, like wage garnishment or filing a tax lien.

Who Receives an LT36 Notice?

Recipients include current and federal employees and contractors. The IRS uses payroll and pension data to identify anyone who’s delinquent on their tax obligations. It’s not limited to high-earning individuals, either; FERDI can flag anyone with a current or former federal job and tax debt or unfiled returns.

Federal employees may face unique circumstances when it comes to tax collection. Here’s why:

FERDI: The government has specific protocols for dealing with federal employee tax delinquency. Under federal regulations, agencies can take disciplinary action against employees who willfully fail to pay their taxes. This initiative isn’t meant to target people who’ve made honest mistakes or are suffering temporary financial hardship, but rather those who are willfully non-compliant.

Higher Accountability Standards: As a federal employee, you’re held to higher standards of conduct, including financial responsibility. The reasoning is straightforward: if you work for the government, you should pay your taxes to that same government.

Easier Collection Methods: From the IRS’s perspective, federal employees represent a more predictable collection opportunity. You have generally stable employment, with documented income. If necessary, collection actions like wage garnishment are more straightforward to implement.

Common Reasons You Might Receive an LT36 Notice

There are a few reasons why you may receive an IRS LT36 notice.

• Unpaid back taxes: You may have filed your return, but didn’t pay the full amount you owed.
• Missed payment plans: You set up an installment agreement or payment plan with the IRS, but didn’t keep up with the payments.
• Missed returns: You didn’t file one or more tax returns, and the IRS filed for you.
• Processing adjustment: The IRS adjusted your return and determined you owe more than you originally calculated.
• Unresolved audit results: Sometimes an audit results in owing additional taxes; if you don’t pay the balance after the appeals process, the IRS may send an LT36.
• Ignored previous notices: Since the IRS typically sends an LT36 after a series of other notices, if you’ve ignored previous correspondence, this notice is how the agency escalates the matter.

What’s Inside an LT36 Notice?

An LT36 notice typically includes the unpaid tax amount you owe. It will reference the specific tax years in question and outline the next steps the IRS will take if you don’t respond. It may warn that the IRS could report your unresolved tax issues to your employing agency, which could seriously impact your job.

Common misconceptions to clarify

• An LT36 is not an automatic wage garnishment. Getting one doesn’t mean the IRS will garnish your paycheck tomorrow. It’s a warning to act before that happens. You’ll get another notice before a garnishment takes place, but procrastinating or ignoring the notice completely can lead to that outcome.
• An LT36 is not an audit. It’s a collection effort. An audit examines your tax return to verify its accuracy. A collection notice is about an existing, unpaid debt or unfiled returns.
• An LT36 can apply to past-due taxes. It’s not just for this year’s taxes, but can cover multiple years of unfiled returns or unpaid liabilities.
• An LT36 is not a scam. That said, be careful! While the LT36 is a real IRS document, scammers sometimes try replicating official IRS communications. To verify the notice, check for key details like your name, address, and last four digits of your Social Security Number. Don’t call a number provided in an email or text message; use the official number on the IRS website or the notice itself. These notices often include a QR code linked directly to the IRS website, where you can access and check your account.

What You Should Do After Receiving an LT36 Notice

Time is critical when you respond to an IRS LT36 notice. Here’s a step-by-step plan.

Step 1: First, don’t panic — but don’t wait. You typically have 30 days from the date on the letter to respond. Don’t procrastinate until the last minute. The sooner you act, the more options you have.

Step 2: Gather your tax documents, including:

• Copies of tax returns for the year(s) in question
• Previous IRS notices and correspondence
• Records of any payments you’ve made
• Documentation of financial hardship (if applicable)
• Employment records and pay stubs

Step 3: Confirm the amount you owe. Before you take any action, verify the IRS’s calculations are correct. Review your tax returns and any adjustments that led to the debt. If you believe there’s an error, you’ll need to address that first.

Step 4: Contact the IRS. Call the number on the notice or visit your local IRS office. Be prepared to:

• Verify your identity
• Discuss your financial situation honestly
• Explore available resolution options
• Request any necessary forms or documentation

Step 5: Explore options for resolution. Depending on your situation, you may have several options:

• Full payment. If you can pay what you owe immediately, do so. It’s the quickest resolution. Even if you need to borrow money or liquidate assets, it might be your best long-term option.
• Installment agreement. The IRS offers several different payment plan options. Your monthly payment will depend on your financial situation and how much you owe.
• Offer in compromise. In some circumstances, the IRS may accept less than the full amount owed. A caveat: this option has strict eligibility requirements and isn’t available to everyone.
• Currently not collectible status. If you’re experiencing genuine financial hardship, the IRS may temporarily suspend collection activities. This suspension doesn’t eliminate your debt, but it can provide breathing room while you get back on your feet.

Step 6: Respond by the deadline. Even better, respond before the deadline. The notice will include a date by which you must act. Missing it could escalate collection efforts and create a bigger issue.

Tax situations can get complex, especially if they involve multiple years or large balances. If you’re facing financial hardship, suspect the notice was issued in error, or want guidance on protecting your employment standing, a tax professional who understands federal employee tax delinquency can guide you through the best options.

How to Avoid Future Notices

Life happens, and there are many reasons why taxes can become snarled, escalating from a minor inconvenience to a serious issue. So, the best defense is a good offense. To prevent future notices, consider these steps:

• Adjust your withholding. Update your W-4 form to ensure your employer withholds enough taxes to cover your tax liability. You can calculate the amount with the IRS tax withholding estimator.
• File on time. Even if you can’t pay the full amount you owe, file your taxes on time to avoid failure-to-file penalties.
• Monitor your IRS account. Check your IRS Online Account regularly to stay on top of any activity.

What You Can Do Now

Given the potential career implications if you’ve received an LT36 notice, it may be worth consulting with a tax professional who understands federal employment requirements and IRS procedures.

Worried about how this notice affects your job? Our tax professionals can help you resolve your IRS issues discreetly and quickly. Contact us for a confidential case review.

Frequently Asked Questions

Is IRS LT36 only sent to government employees?

Yes. This specific notice is part of a targeted initiative (FERDI) for current and retired federal employees and contractors.

What happens if I ignore the LT36 notice?

Ignoring the notice can lead to further collection actions by the IRS, including wage garnishment, tax liens on your property, or asset seizure. The IRS can also notify your agency, potentially affecting your job and any special clearances you hold. Unresolved tax debt can raise concerns during background or security clearance checks.

Will my employer be notified automatically?

No, not automatically. The LT36 notice serves as a warning that if you don’t take action, the IRS could refer the issue to your agency. The goal? Resolving the matter privately and quickly.

Can I dispute the IRS LT36 notice?

Yes. If you believe you received this notice in error because of incorrect calculations, misapplied payments, or identity theft, you have the right to dispute the charges. Contacting a tax professional could help you build your case.

How long do I have to respond?

The notice will state a specific response deadline, typically within 30 days of the date on the letter. You must act within this timeline.

Can I request more time or negotiate the amount due?

Yes. In many cases, you can set up a payment plan extending your time to pay. An Offer in Compromise may allow you to negotiate a lower amount, but qualification is based on your financial situation and several other factors.

What are my options if I can’t afford to pay the IRS?

The IRS offers several relief options, including installment agreements, Offers in Compromise, and Currently Not Collectible status. An experienced tax professional can help you determine the best option for your circumstances.

Does receiving an LT36 affect my credit score?

Not directly. The IRS does not report tax debt to credit bureaus, but unpaid taxes can lead to liens or levies, which may eventually impact your ability to borrow money or transfer assets if left unresolved.