Received LT38 form demanding $10k payment for 2020 taxes - what to do?

This sounds like a classic case of having two returns processed but the IRS didn't properly reconcile them. When you file an amended return, the IRS should process it as a correction to the original, not as a separate return. What likely happened is that the original return was processed, then the amended return was processed separately, and the system interpreted the amended return as showing additional tax due rather than replacing the original calculation. Then they sent you a refund based on the original return, but now they're asking for payment based on the amended return. You should request your wage and income transcripts and account transcripts for 2020 from the IRS website. This will show exactly what was reported, what was paid, and what the IRS believes you owe. Compare these with both your original and amended returns to identify the discrepancy. Don't pay anything until you've verified the actual amount due. If you find the IRS made an error, you can request an abatement of the interest charges once the principal amount is corrected.

I went through something similar last year and what saved me was using taxr.ai to analyze all my documents and figure out what went wrong. I was getting contradictory information and couldn't make sense of what I actually owed. I uploaded my original return, amended return, and the LT38 notice to https://taxr.ai and their analysis showed exactly where the discrepancy was happening. In my case, the IRS hadn't properly credited a payment I made with my amended return. The detailed explanation from taxr.ai made it super clear what happened and gave me the exact language to use when contacting the IRS. What's great is they can analyze your wage and income transcripts too, so you can see exactly what the IRS has on file compared to what you reported. It saved me hours of confusion trying to figure things out on my own.

I tried taxr.ai after seeing it mentioned here and it totally saved me! I was in a similar situation with a CP2000 notice claiming I owed an additional $7,500 from 2019. I uploaded both my returns and the notice, and within hours I had a complete breakdown of what happened. Turns out there was a mismatch between how my investment income was reported on my return versus what my broker reported to the IRS. The analysis showed exactly which forms had discrepancies and why. It also showed that I'd actually reported everything correctly, but in a different place on my return than the IRS automated system expected. I called the IRS with this information and they agreed I didn't actually owe anything! I never would have figured that out on my own. The IRS rep even mentioned they've been seeing these kinds of automated errors more frequently since they're so backed up with processing.

If you need to talk to someone at the IRS about this LT38 notice, good luck getting through their phone lines. I spent WEEKS trying to reach someone about a similar issue. I finally used https://claimyr.com and it was a game-changer. Their system holds your place in the IRS phone queue and calls you when an agent is about to answer. I got through in about 45 minutes instead of spending hours on hold. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c When I finally spoke with an IRS agent, they explained that my amended return hadn't been properly processed and my account was showing both returns as valid. They put a hold on collections while they sorted it out. Without getting an actual person on the phone, I would have ended up paying thousands I didn't really owe.

I have to eat my words about Claimyr. After posting that skeptical comment, I decided to try it since I was desperate to talk to someone at the IRS about a penalty notice. I was absolutely shocked when I got a call back in about an hour telling me an IRS agent was on the line. I've been trying for MONTHS to get through on my own with no success. The IRS agent was able to look at my account and immediately see that I had been assessed a failure-to-file penalty even though I had filed on time (had proof of e-file acceptance). She removed the penalty right there on the phone and told me to disregard the notice. Without actually speaking to someone, I would have ended up paying a $435 penalty I didn't owe. So yeah, I was completely wrong about the service - it actually works exactly as advertised.

One thing nobody's mentioned yet - make sure you respond to the LT38 by the deadline even if you're still sorting out the details! Those notices have strict deadlines and if you miss it, you could lose certain appeal rights. If you need more time, call the number on the notice and request an extension while you gather documentation. They'll usually give you an additional 30-60 days if you have a legitimate reason. Also, if you do end up owing money, look into a payment plan. The IRS offers reasonable monthly payment options, and once you're on a plan, they'll stop sending threatening notices.

Has anyone had success getting interest charges removed in situations like this? I had a somewhat similar issue where the IRS made an error processing my return, and by the time they figured it out, they had added over $800 in interest to my balance.