IRS Notice LT26: What It Is and What to Do

IRS Notice LT26 is a notice that the IRS issues to taxpayers who have not filed one or more

The IRS sends Notice LT26 to taxpayers who it believes have not filed one or more required tax returns and to whom the IRS has already sent a previous notice concerning the issue, such as Notice CP59.

Here is the redacted version of a Notice LT26 that the IRS sent one of our clients.

IRS Notice LT26 At a Glance

IRS Notice LT26  Explained, Part by Part

Here is a full explanation of the Notice LT26, part by part.

Part 1: Please File Your Missing Returns

The first thing you’ll see on your LT26 Notice is the IRS’s demand that you file any missing tax returns.

In the finer print, the IRS informs you of the purpose of sending you this notice: They’re sending it because they are “trying to collect unfiled returns from you.”

They’re also reminding you that they sent you notices before about this issue and you have not responded to them.

Part 2: What the IRS Wants You to Do “Immediately”

Next, the IRS tells you what it wants you to do “immediately.”

The first bullet point in this section, unsurprisingly, instructs you to file your missing returns by a date in the future — typically 10 days from the date of the LT26 itself.

The second bullet point instructs you to pay as much of your balance as you can now with a link to irs.gov/payments where you can do so.

The third bullet point instructs you to call the IRS if you don’t believe you have a filing requirement for the return(s) the IRS notes in the table on the next page or if you have already filed these returns.

And finally, the fourth bullet point instructs you to visit irs.gov/account to learn more information about your account with the IRS.

Part 3: Official Notice Webpage

Next, in a small box, the notice provides you with the link for the IRS’s official webpage for Notice LT26.

While somewhat hopeful, most of the IRS’s official webpage is a regurgitation of what already appears in the notice itself.

Part 4: Summary of Missing Tax Returns

Next, the IRS provides you with a year-by-year summary of the required tax returns that it believes you have not filed.

The IRS believed that our client only had a missing return for one tax year, so that’s why he only has information for the tax period ending “12/31/2020.”

Here is a quick legend on each of the column’s you’ll see for each tax year:

• Tax period ending: This is the last day of the tax period — typically a year but in some cases a quarter — for which the IRS believes you have not filed a required return.
• Form number: This is the type of tax form the IRS believes you must file for the tax period in the previous column.
• Name of return: This is the name of the tax return the IRS believes you must file for the tax period in the first column.

Note, however, that you may not want to file all the returns on this list.

This is because the IRS has a six-year rule when it comes to filing missing tax returns.

Want more information about this? Check out my article on how to file back tax returns or watch my YouTube video on filing back tax returns below.

Part 5: What the IRS Says They Will Do If They Don’t Hear From You

Next, the IRS tells you what will happen if they don’t hear from you about this matter.

Although the consequences of not filing taxes can reach much further than these, the specific consequences listed in this section are:

• Increased interest: IRS interest is compounded daily, so every day that goes by without you filing your returns and paying the tax due thereon means more interest the IRS can and will charge you.
• Additional penalties: Assuming you owe taxes for the year or years you haven’t filed, waiting to file your return(s) and pay the tax due on them could result in additional penalties. The two major IRS penalties are the failure-to-pay penalty, which is 0.5% of the tax due per month that a tax is not paid (with a 25% maximum), and the failure-to-pay penalty, which is 5% of the tax due per month on a late-filed tax return (with a 25% maximum). Chances are by the time you’ve received the Notice LT26 that the failure-to-file penalty will have already maxed out on the balance when you eventually file your return.
• Fines and criminal penalties: It is a federal crime under Section 7203 of the Internal Revenue Code to willfully fail to file a required return. While the majority of non-filers will not face criminal prosecution, some do, and it is in your best interest to file your unfiled returns sooner rather than later.
• Preparation of a substitute for return (SFR): If you do not file your required return after receiving Notice LT26, the IRS will likely prepare its own return for the year for you called a substitute for return or SFR. To learn more about IRS SFRs, read this article.

Part 6: IRS Help

Next, the IRS provides you with basic IRS contact information — via telephone or mail — and the link on the IRS website to find tax forms and publications.

Part 7: Taxpayer Rights and Sources for Assistance

In this section, the IRS provides you with some information about the Taxpayer Bill of Rights, IRS Publication 1, Low-Income Taxpayer Clinics (LITC), and the Taxpayer Advocate Service.

When the IRS Sends Notice LT26

The most common reason for the IRS sending you a Notice LT26 is when the following things happened:

1. The IRS determined that you did not file a return by the due date despite the fact that you apparently received income — and the IRS would know you received income because it received tax forms about you from third parties such as Form W-2, Form 1099, Schedule K-1, etc.
2. The IRS created a “Return Delinquency Case” for you under the procedures found in Internal Revenue Manual Section 5.19.2.
3. The IRS previously sent you other notices, such as the CP59 Notice, about your unfiled return or returns, and you did not respond.

What You Should Do If You Receive a Notice LT26

In most cases, the best thing to do when receiving a Notice LT26 from the IRS is to simply file your original tax return requested in the notice rather than waiting for the IRS to prepare an SFR for you and assess and attempt to collect taxes based on that SFR.

Now, if the year in question is from a while back, that may be easier said than done.

However, lucky for you, I have put together a guide to filing back tax returns that you can access by clicking here or by watching the video below!

Of course, if you still owe the IRS a balance due after filing your original return, you’ll need to figure out how you’re going to resolve this balance.

Now, you could simply pay whatever balance is owed in full along with penalties and interest.

But it’s generally at least worth seeing if you’ll qualify for any penalty abatement and if you really can’t pay what you owe at the moment see if you could qualify for some kind of tax relief option, such as an offer in compromise, some kind of installment agreement, being placed in currently not collectible status, or several others.

To learn more about these options, read this article about how to get IRS tax debt relief or watch the video below.

Author:

---

Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

• 
• 
•