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PANDEMIC RELIEF

IRS Letter LT38: Post-Pandemic Collection Notice

The IRS is resuming collection activities that were suspended during the COVID-19 pandemic. This notice explains your options and rights as collection actions restart.

COVID-19 Collection Suspension is Ending

During the pandemic, the IRS suspended most collection activities to help taxpayers facing financial hardship. As the economy recovers, the IRS is gradually resuming these activities.

  • • Collection activities were paused from March 2020 to December 2021
  • • The IRS is now sending LT38 notices to restart collection processes
  • • You still have all your taxpayer rights and options
  • • Financial hardship programs remain available

What Does LT38 Mean?

The LT38 notice is sent to taxpayers who had collection cases suspended during the pandemic. This notice indicates:

  • Your case was put on hold during the COVID-19 pandemic
  • Interest and penalties continued to accrue during the suspension
  • The IRS is resuming active collection on your account
  • You have time to respond before collection actions begin

Your Resolution Options

Option 1: Pay Your Balance in Full

  • • Resolves the matter completely
  • • Stops all interest and penalties
  • • Use IRS.gov for secure online payment
  • • Payment plans available if you can't pay all at once

Option 2: Set Up a Payment Plan

  • • Short-term payment plan (up to 120 days)
  • • Long-term installment agreement (over 120 days)
  • • Online application available at IRS.gov
  • • May include setup fees and continued interest

Option 3: Request Hardship Status

  • • Currently Not Collectible (CNC) status if facing hardship
  • • Temporarily suspends collection while you recover financially
  • • Must demonstrate financial hardship with documentation
  • • Status is reviewed periodically by the IRS

Option 4: Explore Settlement Programs

  • • Offer in Compromise (settle for less than you owe)
  • • Penalty abatement for reasonable cause
  • • Innocent spouse relief (if applicable)
  • • Professional evaluation recommended

COVID-19 Impact on Your Case

Special Pandemic Considerations

If the pandemic affected your ability to pay taxes, you may have additional options:

  • • Lost income due to COVID-19 job loss or business closure
  • • Medical expenses related to COVID-19 treatment
  • • Caring for family members affected by COVID-19
  • • Business disruption and reduced revenue
  • • Other pandemic-related financial hardships

Important:

Document any COVID-19 related financial impacts to support hardship requests or penalty abatement applications.

What Happens Next?

Timeline for Response:

Immediate: Review Your Options

Evaluate your financial situation and available resolution methods

30 Days: Respond to the IRS

Contact the IRS or set up a payment arrangement

60+ Days: Collection Resumes

If no response, normal collection activities will begin

Proactive Steps You Can Take:

  • • Gather financial documents showing pandemic impact
  • • Calculate what you can realistically afford to pay
  • • Research payment plan options on IRS.gov
  • • Consider consulting with a tax professional
  • • Document any ongoing financial hardships