Resolving Tax Liabilities

Best Strategies to Negotiate with the IRS

The IRS has a wide range of powerful tools to recover revenues. Facing an IRS collection effort can disrupt every aspect of your life. The IRS is relentless in its collection activities. For a business, your entire operation may be at stake. To most people, the Internal Revenue Service is a mystery. It collects taxes and can make your life miserable. In addition, the IRS can file liens against your assets without obtaining a court order. However, the IRS has been much more willing to compromise with taxpayers with overwhelming tax debt than in the prior decade.

Yes, dealing with the IRS is stressful. That much may never change. However, there are a few basic things to know to help you navigate the IRS Collections Division when trying to negotiate IRS debt. The key pieces of advice I can give are: be compliant, be respectful, and keep your commitments.

Be Tax Compliant

You must have filed all of your previous year returns. This means that you cannot have any outstanding tax years where you didn’t submit a return. Since you can go back and file your past returns at any time, you’ll want to complete and submit any past unfiled returns before you begin the process of negotiating with IRS. Many tax payers must submit income tax estimated payments quarterly. Making quarterly payments is required in order to be in full tax compliance. In short, IRS compliance means having all tax returns filed and making all necessary current tax payments in full and on time.

When a taxpayer is not in compliance, they are: 1. Making their balance larger 2. They’re more likely to receive enforced collection action, such as bank levieswage garnishments, and seizure of assets. Lastly, the taxpayer will not be eligible for formal resolution of their balance. Basically, they are trying desperately to defend themselves from all the nasty things the IRS can do to them. When a taxpayer is compliant, it becomes much easier to prevent those dreaded bank and wage levies and actively work to negotiate their balance.


Be Patient and Respectful

Leave your bad attitude and anger behind. You will achieve nothing by yelling at the IRS agent assigned to your case. The IRS as an agency is filled with bureaucracy, and they may not be as efficient as you want them to be. Some days you wait hours on the phone just to get a hold of an agent, and as soon as you say hello, the line cuts off. This can be very frustrating. Nevertheless, when dealing with the IRS, avoid any confrontation. Take a deep breath, show respect, and demonstrate a cooperative attitude. Remember, IRS agents are just doing their jobs.

Keep Your Commitments

Only make promises you can keep. Sometimes the IRS’s analysis of your financial situation will indicate you can pay a certain amount per month to resolve a tax debt settlement. If an IRS agent asks you if you can pay $600 per month, and you realize that you can only pay $450 per month, then tell the agent that’s all you can pay. Don’t set yourself up for failure by agreeing to pay something you can’t afford. Defaulted agreements may put you at a disadvantage in future negotiations. Unfortunately, the majority of people that negotiate a settlement with IRS have to renegotiate several times due to not submitting payments on a timely fashion.

Should I Hire a Professional?

If you are lost in the process and don’t know how to handle the response. Contact or consult a  license professional. If there is a phone number on the letter or notice, call it and advise them how you are intending to resolve the debt.

Nearly all written collection correspondence from the IRS will give a deadline or date by which to respond. Take note of those dates. If you are communicating with them on or prior to the date on the notice, you will have a better chance at avoiding enforced collection action.  If you disagree with the results, you have the right to file an appeal. A taxpayer can begin the appeals process by requesting an appeals conference. This is an informal exchange of information, either by telephone, letter or at an in-person conference.

IRS Settlements Options

Installment Agreement:

An Installment Agreement is a Internal Revenue Service (IRS) program which allows individuals to pay tax debt in monthly payments. The total amount paid can be the full amount of what is owed, or it can be a partial amount. The IRS does charge a set up fee when applying for an Installment agreement. Not all tax payers will qualify for an Installment plan and may require full financial and assets disclosure.

Offer in Compromise:

An Offer In compromise an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed. Most tax payers with minimal income and no assets can settle for pennies on a dollar.  Taxpayers who can fully pay the liabilities through an installment agreement or other means, generally won’t qualify for an OIC in most cases.


Currently Uncollectible:

There are times where you agree you owe the IRS, but you can’t pay due to your current financial situation. If the IRS agrees you can’t both pay your taxes and your reasonable living expenses, it may place your account in Currently Not Collectible (CNC) status

File bankruptcy:

You can discharge (wipe out) debts for federal income taxes in Chapter 7 bankruptcy only if you meet certain conditions are true. Taxes other than income, such as payroll taxes or fraud penalties, can never be eliminated in bankruptcy.

Release Wage Garnishments:

An IRS levy permits the legal seizure of your property to satisfy a tax debt. It can garnish wages, take money in your bank or other financial account, seize and sell your vehicle(s), real estate and other personal property. Garnishments can leave you struggling to pay the essential living expenses. Fortunately, you still have options to stop wage garnishment. If you’re facing wage garnishment, there are steps you can take to stop the process.


Innocent Spouse Relief:

If you filed a joint return, you may qualify for relief from some or all of a tax bill issued to you and your spouse (or former spouse) if you meet the certain conditions.

Statute of Limitations:

The IRS has a right to file a Notice of Federal Tax Lien (NFTL) against any taxpayer, business or individual, who owes the IRS more than $10,000. Under Internal Revenue Code Section 6502, the IRS has 10 years to collect that tax deficiency. Before the end of the 10-year period set forth in the statute the IRS can take the taxpayer to federal court and obtain a judgment for the unpaid taxes. A judgment extends the statue of collecting tax debt an additional 10 years.

Our Services

Rarely do our clients have to talk with the IRS. We handle it all for you so that you don’t need to take time off to handle the bureaucracy and paperwork of the IRS. We fight hard for our client’s rights. If needed, we file and assist in appealing the tax assesment decisions.

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