What Is IRS Notice LT16?

IRS Notice LT16 is sent when the IRS has information suggesting you may have had a tax filing obligation for one or more prior years but no tax return was received. The notice asks you to file the missing returns or to contact the IRS to explain why you don't have a filing obligation (for example, because your income was below the filing threshold).

The IRS identifies potential non-filers by matching third-party information reports — W-2s from employers, 1099s from banks and clients — against its database of filed returns. If a W-2 or 1099 shows income attributed to your Social Security number but no corresponding return was filed, the IRS may send an LT16 to prompt you to file.

If you receive an LT16 and you did owe a filing obligation, file the return as soon as possible. Filing late is always better than not filing at all — the failure-to-file penalty (5% per month up to 25% of the unpaid tax) stops accruing once you file, and interest is calculated from the original due date regardless. If you owe tax on the late return, you'll also owe the failure-to-pay penalty (0.5% per month up to 25%) and interest. However, if the return shows you're owed a refund, the late filing penalty doesn't apply — though there's a three-year statute of limitations on claiming refunds, so very old unfiled returns may not produce a refund even if you were owed one.

If you don't respond to the LT16 and don't file, the IRS may prepare a Substitute for Return (SFR) on your behalf using only the income information they have — without any deductions, credits, or other adjustments that would reduce your liability. An SFR almost always results in a higher tax bill than a return you file yourself. Once an SFR is filed, the IRS begins collection action on the resulting liability, though you can still supersede it with your own tax return. Responding to an LT16 promptly — either by filing the returns or calling to explain your situation — is strongly preferable to waiting for the IRS to prepare an SFR.