LT40 Notice: The IRS Plans to Contact Other People About Your Taxes

What the LT40 notice says

The IRS page for this notice says: “We’re trying to collect unpaid taxes and unfiled returns from you. To do so, we intend to contact others to get or verify your contact information.” It tells you to read the notice, file any missing returns, and pay the balance or set up a payment plan.

The Internal Revenue Manual (IRM), the IRS’s staff rulebook, calls the LT40 a notice of possible third party contact for balance due accounts. A third party is anyone other than you, such as an employer, a bank or a neighbor.

Why the law requires this letter

Apart from narrow exceptions, IRC 7602(c)(1) bars the IRS from contacting anyone other than you about figuring or collecting your tax unless the contact falls inside a period, no longer than 1 year, that a notice to you names. The notice must reach you “not later than 45 days before the beginning of such period.” The LT40 is that notice; the IRS page says contacts may continue for one year from the date of the notice.

The same section, IRC 7602(c)(2), requires the IRS to give you a record of the people it contacted, from time to time and whenever you ask. The IRS page says it mails the list once a year, and no list means it made no contact it must report. IRM 25.27.1.5 adds that you can ask for the list at any time, by phone or in writing.

IRC 7602(c)(3) lists the exceptions. The notice rule does not cover a contact you authorize, a case where the IRS decides that notice would put collection at risk or invite reprisal against someone, or a pending criminal investigation.

The part people miss: a levy is a contact too

The IRS page talks about verifying your contact information. The IRM reaches further. Its definition of a third party contact includes “a levy or summons issued to anyone other than the taxpayer such as a bank, credit card processor or employer.”

That explains the timing. IRM 5.19.4.3.1 tells collection staff to issue an LT11 or LT40 “ONLY where the next action will be to levy.” The same section says staff generally wait at least 46 days after the LT40 before they request a levy, so treat the date on your LT40 as the start of that wait. The LT40 covers tax periods where the separate levy warning with a hearing right already went out. When some periods still need that warning, staff send an LT11 at the same time. The IRM also says a contact with a person who holds your valid power of attorney does not count as a third party contact.

The LT40 itself carries no hearing right. If you want a Collection Due Process hearing, look for the LT11 or Letter 1058 in your papers and its deadline.

What you can do now

Pay what you can. The IRS page says payments reduce the interest and penalties added later. If you owe less than $50,000, the Online Payment Agreement tool is the fastest way to a payment plan; otherwise call the number on your notice. Our collection alternatives router compares a plan with the other options.

If you cannot pay anything, the IRS page describes currently not collectible status, a temporary pause while your finances recover, and an offer in compromise, which settles the debt for less when you qualify. Payments can take time to post: “If you paid your balance in full within the last 21 days, please disregard the LT40 you received.” If you already have an approved payment plan, the IRS page says to keep making the payments; if you applied and still wait for approval, pay as much as you can now.

If the notice lists missing returns, file them. If you sent a return more than 10 weeks ago, the IRS page says to send a signed copy again.

What people mistake the LT40 for

Some readers take the LT40 for the final levy notice with a hearing right. It is not; that is the LT11 or Letter 1058.

Others fear the IRS will tell their neighbors how much they owe. The IRS page says it generally tells a contact only limited information, such as your name, and that “the law prevents us from disclosing any more information than is necessary.” The LT50 is the later notice that the IRS will keep contacting people.

Common Questions