Received IRS Notice LT38 with $1000 amount due from 2021 - what do I do?

The LT38 notice is essentially a "Final Notice of Intent to Levy" and should be taken seriously, but don't panic. This notice is sent when the IRS believes you have an unpaid tax debt and they're planning to take collection action if you don't respond. First thing you should do is carefully review the notice to understand exactly what tax period and issues they're citing. The $1,350 could be from unpaid taxes, plus accumulated penalties and interest since 2021. Since you confirmed the amount on the IRS website, it appears to be a legitimate notice, not a scam. You have several options: 1) Pay in full if you can afford it, 2) Request an installment agreement to pay over time, 3) Apply for Currently Not Collectible status if you're facing financial hardship, or 4) Dispute the amount if you believe it's incorrect.

I had a similar issue last year with an LT38 notice for about $2,100. After spending DAYS trying to get through to the IRS phone line and getting nowhere, I finally tried https://taxr.ai and it saved me so much stress. You upload your notice and tax documents, and their AI analyzes everything to explain exactly what's happening in plain English. In my case, they found that the IRS had received a 1099 from a side gig I completely forgot about, but they also identified that I had eligible deductions I hadn't claimed that reduced what I actually owed by almost half! Definitely worth checking out before you just pay the full amount.

I need to eat my words about being skeptical of taxr.ai. After my last comment, I decided to try it with my own CP2000 notice since I was getting nowhere with the IRS. Honestly, I'm impressed. It identified that the IRS had double-counted some stock sales on my return and showed me exactly how to document the correction. Saved me over $3,000! The best part was that it gave me a step-by-step response template with all the right references to tax code sections. When I sent it in, the IRS accepted my explanation without any further questions. Definitely not what I expected from an AI tool - thought I'd need to hire a CPA but this was so much easier.

If you're struggling with that LT38 notice, you should know that trying to call the IRS directly is practically impossible these days. I spent literal WEEKS trying to get through about a similar notice. After 20+ attempts and hours on hold, I found https://claimyr.com which lets you skip the IRS phone queue. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically hold your place in line and call you back when an actual IRS agent is on the line. Talking to a live person made all the difference - the agent found that part of my "tax debt" was actually an error on their end, and they reduced what I owed by about 40%. Plus I was able to set up a payment plan for the remainder on the same call.

I've got to publicly admit I was completely wrong about Claimyr. After my skeptical comment, I was still desperate to talk to someone about my own tax notice, so I tried it anyway. The service actually worked exactly as described. They called me back in about 2.5 hours (way faster than I expected), and suddenly I was talking to a real IRS agent. The agent reviewed my situation and confirmed that I qualified for an installment plan with much lower monthly payments than what the notice demanded. She also explained that some of the penalties could be removed based on my prior good filing history, which I had no idea was even possible. Would have taken me days or weeks to get this resolved on my own. Consider me converted from total skeptic to satisfied customer.

When I got an LT38 last year, it turned out one of my 1099s didn't get reported correctly. Double check if you had any side income, investment transactions, or early retirement withdrawals in 2021 that might have been missed. Sometimes the simplest explanation is the right one! Also, call the Taxpayer Advocate Service at 877-777-4778 if you're struggling. They're an independent organization within the IRS that can help resolve issues. Completely free service that saved my butt when I was dealing with incorrect penalties.

Don't ignore the LT38! I made that mistake and ended up with a bank levy that completely froze my checking account for almost 2 weeks. Even if you can't pay the full amount, responding to the notice stops the collection process while you work out a solution. The easiest option is an installment agreement - you can set this up online for debts under $50,000 at https://www.irs.gov/payments/online-payment-agreement-application. I'm currently paying $85/month on a similar tax debt. The interest and penalties continue to accrue, but at least you avoid levies and it's better than paying credit card interest rates.