LT73 Notice: The IRS Levied for Unpaid Employment Tax

What the LT73 notice says

The IRS page for this notice says: “You still have unpaid federal employment tax. We issued a levy to collect your unpaid taxes.” It tells you to pay the balance in full to avoid more penalties and interest, to set up a payment plan if you cannot, and to call the number on the notice if you already paid.

The word “issued” is the key: the IRS has already acted. A levy is a legal order that lets the IRS take property, such as money in a bank account, to pay a tax debt.

Why the IRS levied before offering a hearing

Before most levies, the law requires the IRS to offer a Collection Due Process (CDP) hearing, a review by the IRS Independent Office of Appeals. The usual warning letter is the LT11 or Letter 1058, which our final notice of intent to levy page explains. IRC 6330(f) lists exceptions, and one of them is a “disqualified employment tax levy.”

IRC 6330(h)(1) defines that levy. It is a levy to collect employment taxes for a tax period when the business, or a business it took over, requested a CDP hearing on unpaid employment taxes arising in the most recent 2-year period before that tax period began. The IRM adds that only a timely, processable request counts; an equivalent hearing or a late request does not.

The IRM measures the 2 years back from the first day of the period the IRS now levies for. Its own example: a business requested a CDP levy hearing for the Form 941 quarter that ended 12/31/2021, and new tax arose for the quarter that ended 06/30/2022. That quarter began 04/01/2022, so the look-back runs to 04/01/2020, the earlier quarter falls inside it, and the new quarter qualifies. The IRS’s collection system flags the question when a business owes tax on Form 941, 943, 944, 945, 940 or CT-1 and a prior CDP levy hearing shows within that window.

The IRM tells the IRS’s Automated Collection System staff that when a business meets those terms, and the CP504 notice and the required advance notice about contacting third parties have gone out, they may issue the levy. Then “an LT73, post CDP letter, will automatically generate.” The IRM also calls this levy discretionary. The IRS may still send a pre-levy notice first when the situation warrants.

Your hearing right and its deadline

IRC 6330(f) requires the IRS to give the business the opportunity for the hearing within a reasonable period of time after the levy. The regulation sets the window: a taxpayer “must request the CDP hearing within the 30-day period commencing on the day after the date of the CDP Notice.” That rule covers a post-levy notice like the LT73. The period starts the day after the date printed on your letter.

The IRS page points to Form 12153, Request for a Collection Due Process or Equivalent Hearing. At the hearing, IRC 6330(c) lets the business raise any relevant issue about the unpaid tax or the levy. That includes a challenge to whether the collection action is appropriate and an offer of a collection alternative, such as an installment agreement or an offer in compromise. The IRM says the business may take the result of a post-levy hearing to the Tax Court.

If the business has an authorized representative on file, the IRM says the representative gets a copy of the LT73 for the tax periods the authorization covers. Check that copy against the business’s own letter.

A timely request also pauses the time limit the IRS has to collect the tax. The regulation says the pause starts on the date the IRS receives the written request and runs until the business withdraws the request in writing or the hearing’s outcome becomes final. Our CSED calculator shows how a pause like this moves the collection deadline.

The trap: the hearing may not stop more levies

With an ordinary pre-levy notice, a timely hearing request stops the IRS from levying for the periods under review. This levy works differently. The IRM says the IRS may serve this kind of levy during a timely requested pre-levy or post-levy CDP hearing, or during court review of that hearing, to collect the same employment tax periods if collection is at risk.

A timely request still matters: it opens the hearing, the Tax Court review and the pause on the collection deadline. It does not protect the business’s accounts from another levy of this kind when the IRS finds collection at risk.

If you cannot pay in full

The IRS page tells you to look into a payment plan and warns that you must be current on your filings to apply for an installment agreement. File any missing employment tax returns first. Our collection alternatives router compares a payment plan with the other options for a business.

You can also raise a payment plan at the CDP hearing itself, because IRC 6330(c) lists an installment agreement among the collection alternatives a business may offer there. If you already paid the balance, the IRS page tells you to call the number on your notice.

What people mistake the LT73 for

Most IRS levy letters, such as the LT11 or Letter 1058, warn of a levy to come. Readers often take the LT73 for one of them. It reports a levy the IRS already issued.

Others assume a hearing request stops levies for the periods it covers, as it does after an LT11. For this levy, the IRM says it may not.

Common Questions