What Is IRS Notice LT36? Sent to Federal Employees and Retirees

Since 2013, the number of federal employees with tax debt has risen to about 6% (5% or more of congressional employees and about 4% of White House staff). In the spring of 2025, the IRS sent letters to 525,000 federal employees and retirees with a dire implication: If you don’t reconcile your outstanding taxes, you could jeopardize your job.

Notice LT36 lacks personalized information like the amount owed or the specific tax year with a missing return; it merely contains a broad warning that the recipient is in tax arrears.

The letter warns of escalation if you ignore the notice, and reminds you of your legal responsibilities under U.S. tax law and your responsibilities to “lead by example” as a federal employee.

Notice LT36 from the IRS isn’t the only collection notice the agency sends, but it’s the newest. It’s so new that the IRS hasn’t yet published guidance on its website, nor detailed the potential consequences current and former federal workers may face. Many tax professionals aren’t sure how the agency will act on it. However, existing tax codes and legal precedents offer a good indicator of what steps the IRS could take if this notice arrives in your mail.

Key takeaways

• LT36 – A new IRS notice for federal employees and retirees who owe taxes.
• The notice doesn’t specify consequences, but analysts claim that it could lead to loss of jobs.
• If you’ve received LT36, consider contacting a tax attorney for help.

Steps to take if you receive Notice LT36

First, don’t panic. After contacting the IRS, some people learned that they received the letter in error. If you are noncompliant with your tax obligations, you must pay your taxes in full to prevent further action. You can contact the IRS by phone or log in to the IRS portal to arrange payment.

The agency offers several payment solutions:

• Installment agreements: You can pay off your tax debt in monthly installments for up to 10 years from the original due date or assessment date.
• Offer in Compromise (OIC): If you can successfully prove that you lack the income or assets to pay your full bill, you may qualify for a settlement that’s less than you owe. Because you may face specific restrictions when applying for an OIC, consider working with a tax professional who’s experienced in representing federal employees.
• Currently Not Collectible (CNC): If you establish that you cannot afford payment, the IRS may halt its collection actions and mark your account as currently not collectible. This option may not be available for current federal employees, but it may be available for former or retired employees.

Addressing errors

Think you received Notice LT36 in error? Call the IRS directly using the number on the notice. Potential errors could include incorrect calculations, misapplied payments, notices sent to the wrong taxpayer, tax liabilities from identity theft, or other IRS mistakes.

Don’t ignore Notice LT36 or procrastinate

Ignoring this notice could lead to severe consequences, perhaps more so than for other taxpayers, because of federal employees’ unique position. Here’s what might happen.

• The IRS could escalate collection actions, including filing a federal tax lien against your assets (home, car, bank accounts).
• The IRS could take direct action to seize your assets via wage garnishment, bank levies, and seizure of other assets.
• The IRS could use the Federal Payment Levy Program (FPLP) to levy a portion of federal payments, including salaries, military retirement payments, and Social Security benefits.
• Penalties and interest will accrue.

Specific consequences for federal employees

Financial irresponsibility, including tax non-compliance, is a common reason for denying or revoking a security clearance. Losing a clearance can end your career, as many positions require it.

Federal agencies may have the authority to terminate employees who fail to meet their tax obligations. Non-compliance could mean losing your job.

Tax issues, especially those leading to liens or other public records, can damage your professional reputation and potentially impact future career opportunities.

Using the QR code on Notice LT36

Use your smartphone to access the QR code on the notice. It takes you to the IRS webpage where you can set up an account if you don’t already have an ID.me account. This account lets you see your tax history for the past 10 years, including:

• Returns you’ve filed
• What you owe
• Tax documents filed in your name (e.g., 1099s or W-2s your employers have filed)

If you owe less than $50,000 (including assessed taxes, penalties, and interest) and are up-to-date on filing your tax returns, you can set up a simple payment plan.

Notice LT36 FAQs

If you’re one of the 5.25K federal employees who received this notice in the spring of 2025, here are answers to some questions you might have.

Can I lose my job if I don’t pay my taxes?

The short answer? Maybe. While the notice doesn’t explicitly threaten job loss, termination remains a risk if you don’t pay your taxes. Not meeting your tax obligations means you’re also not meeting the legal requirements of your duty as a federal employee.

The code puts employees “on notice” regarding these statutes. The code itself serves as official notification; you’re bound by its terms, even if you’re not fully aware of them.

Did DOGE send LT36?

There’s no definitive proof that the Department of Government Efficiency (DOGE) sent Notice LT36 at the time of this writing. However, the organization continues to evaluate various government agencies for efficiency and cost management. Ongoing analyses and recommendations have led to 59,000 federal workers officially losing their jobs.

What is 5 CFR 2635?

5 CFR 2635 refers to a set of rules and guidelines governing the ethical behavior of U.S. federal employees. It covers a range of ethical issues, including:

• Basic obligations of public service
• Accepting gifts
• Financial conflicts of interest
• Imparitality
• Seeking other employment
• Misuse of position
• Outside activities

It also covers just financial obligations, stating that all employees “shall satisfy in good faith their obligations as citizens, including all just financial obligations, especially those—such as Federal, State, or local taxes—that are imposed by law.”

In other words, you’re expected to set an example by paying all taxes you owe.

Can I get arrested because I received LT36?

No. You won’t get arrested. The notice doesn’t explicitly state that you’re at risk of criminal prosecution. It doesn’t indicate any specific actions the IRS could take.

But you shouldn’t ignore the notice. Once you confirm that you owe taxes, talk to a tax attorney about your financial obligations and the best strategy for paying them.

Will the IRS seize my assets?

The IRS won’t seize your assets immediately after sending the Notice LT36. However, the agency can seize them after issuing a Final Intent to Levy notice. This notice gives you 30 days to either appeal or arrange payments. If you don’t address the notice within that timeframe, the IRS can proceed with the seizure.

A few exceptions to the 30-day rule exist. If the IRS believes your tax collection is in jeopardy (they think you’ll try to hide or get rid of assets), they can levy your assets without warning. The IRS also has the right to seize federal contractor payments without warning to settle unpaid tax debt.

I’m a federal employee with tax debt, but I didn’t receive this notice. Now what?

There are several reasons why you may not have received Notice TL36. The IRS may have sent other notices, or their automated system doesn’t have the information needed to connect your tax debt with the federal government. If you’ve moved recently, it’s also possible the notice went to your previous address.

The government is actively targeting federal employees with outstanding tax liabilities. Even if you haven’t received this notice, if you owe past taxes, you should explore the options available to pay your debt.

Resolve your tax debt now.

If you received Notice TL36 and are struggling to manage back taxes or deal with unfiled returns, the Tim S. Hart Law Group, P.C., offers the federal and state tax expertise you need.

If you owe taxes you can’t pay, we can help reduce your burden by negotiating an offer in compromise or a partial payment installment agreement, so you avoid paying the full original balance. For unfiled returns, we’ll prepare and file them, then explain your best options to minimize penalties through voluntary disclosure or penalty relief. Don’t wait – contact us for help today.