The IRS Wants to Talk to Your Employer: Understanding the IRS LT40 Notice
- Howard Richardson
- Dec 28, 2025
- 4 min read
Receiving a letter from the IRS is rarely a welcome sight. The official envelope, the dense text, the feeling of uncertainty – it’s enough to make anyone’s heart race. If you’ve recently received an IRS LT40 notice, you might be feeling a mix of confusion, anxiety, and even fear. Take a deep breath. You’re not alone, and this is a situation you can navigate with the right information and support.
This blog post is here to be your guide. We’ll walk through what the LT40 notice means, why you received it, and most importantly, what you can do about it. We’ll break down the legal jargon into plain English and provide you with a clear action plan. So, let’s get started.
What Exactly Is an IRS LT40 Notice?
In simple terms, the IRS Notice LT40 is a letter informing you that the IRS intends to contact other people and businesses to gather information about you. This is part of their effort to collect unpaid taxes or secure unfiled tax returns. The notice itself is not a bill or a levy, but it is a serious warning that the IRS is escalating its collection efforts.
Think of it as a heads-up. The law, specifically Internal Revenue Code (IRC) Section 7602(c), requires the IRS to give you this advance notice before they start reaching out to third parties. This is a right you have as a taxpayer, and it’s designed to give you a chance to resolve the issue directly with the IRS before they involve others.
Why Did I Receive an LT40 Notice?
There are two primary reasons why you might receive an LT40 notice:
1. You have an unpaid tax balance: The IRS believes you owe taxes from a previous year and is now taking steps to collect that liability.
2. You have unfiled tax returns: The IRS has identified one or more years where you were required to file a tax return but did not.
The LT40 notice is typically sent by the IRS’ Automated Collection System (ACS), which is the department responsible for collecting overdue taxes. It’s a sign that their previous attempts to contact you and resolve the issue have been unsuccessful.
The Legal Side of Things (Made Simple)
The IRS doesn’t just have free rein to contact anyone they want. Their ability to do so is governed by strict laws and regulations. The most important one for you to know about is IRC Section 7602(c). This law was put in place to protect taxpayers from overly intrusive collection tactics.
Here are the key takeaways from the law:
45-Day Advance Notice: The IRS must send you the LT40 notice at least 45 days before they make their first third-party contact.
One-Year Time Limit: The notice is generally valid for up to one year from the date it was issued.
Record of Contacts: The IRS is required to keep a record of everyone they contact about you. You have the right to request a copy of this list once a year.
It's also important to understand the difference between the LT40 notice and a similar notice called Letter 3164. While they both serve the same purpose of notifying you about third-party contacts, they are used by different IRS departments. Letter 3164 is used by the IRS while they are conducting an examination (audit) and the notice period is also 45 days like the LT40.
Who Might the IRS Contact?
The IRS can contact a wide range of people and businesses to gather information. This could include:
Your employer: To verify your employment and income, and potentially to garnish your wages.
Your bank: To locate your accounts and potentially to levy them.
Your clients or customers: If you are self-employed, to verify your income.
Your neighbors: To confirm your address or other personal information.
Public records offices: To find information about your assets, such as property you own.
This is why the LT40 notice is so serious. The IRS contacting these third parties can be embarrassing and can damage your personal and professional relationships.
Your Action Plan: What to Do Now
Ignoring an LT40 notice is the worst thing you can do. Now is the time to be proactive and take control of the situation. Here are the steps you should take:
Read the Notice Carefully: The notice will tell you which tax years are in question and whether the issue is an unpaid balance, unfiled returns, or both.
Contact the IRS (or Have a Professional Do It for You): The notice will have a phone number to call. It’s crucial to communicate with the IRS and let them know you are addressing the issue.
Explore Your Options: You have several options for resolving your tax debt:
Pay in Full: If you can, paying the balance in full is the quickest way to resolve the issue.
Installment Agreement: If you can’t pay in full, you can request a payment plan to pay the tax liability over time.
Offer in Compromise: If you are experiencing significant financial hardship, you may be able to settle your tax liability for less than the full amount you owe.
Currently Not Collectible: In some cases, the IRS may determine that you are unable to pay the tax liability at this time and temporarily suspend collection efforts.
File Any Missing Returns: If the notice is about unfiled returns, you must file them as soon as possible.
You Don't Have to Go Through This Alone
Dealing with the IRS can be overwhelming, especially when you’re facing a situation like this. But you don’t have to do it alone. A qualified tax professional can help you understand your options, communicate with the IRS on your behalf, and work towards a resolution that is in your best interest.
Watch Our Free Video on handling your IRS issues
For a more in-depth explanation of your options when dealing with an IRS issue, watch our free video. We break down everything you need to know in an easy-to-understand format.
Book Your Consultation Today
If you’ve received an IRS LT40 notice, don’t wait. The sooner you take action, the more options you’ll have. Book a consultation to discuss your situation and help you create a plan to move forward and put your IRS issues behind you.
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