The IRS recently announced it is resuming sending out reminder collection notices and letters that were paused during the pandemic.
You may receive one if:
- You have individual tax debt before tax year 2022.
- Your business, tax exempt organization, trust or estate has tax debt before tax year 2023.
The IRS will issue a special reminder letter, “LT38, Reminder, Notice Resumption,” to alert taxpayers of their tax liability. This letter will explain how to contact the IRS and make arrangements to resolve the tax bill.
The IRS reminds taxpayers to update their address if they have moved. Here are the many ways to notify the IRS of an address change.
Possible Penalties and Interest
Taxpayers who owe tax and do not file on time may be charged a failure-to-file penalty. This penalty is usually 5 percent of the tax owed for each month or part of a month that the tax return is late, up to 25 percent.
The failure-to-pay penalty applies if a taxpayer does not pay the taxes they report on their tax return by the due date or if the taxpayer does not pay the amount required to be shown on their return within 21 calendar days of receiving a notice demanding payment (or 10 business days if the amount is greater than $100,000).
The IRS is required by law to charge interest when a tax balance is not paid on time. Interest cannot be reduced due to reasonable cause. Interest is based on the amount of tax owed for each day it is not paid in full. The interest is compounded daily, so it is assessed on the previous day’s balance plus the interest. Interest rates are determined every three months and can vary based on type of tax; for example, individual or business tax liabilities. More information is available on the IRS’ interest page.
If you receive an IRS notice, do not ignore it. Contact your tax advisor for assistance immediately.