Tax Debt Negotiation
Getting Your Way with the IRS

Tax debt negotiation is one option on the table when you find yourself unable to meet the tax obligations. As far as tax debt solutions go, you are usually far better trying to negotiate and settle rather face off against the Internal Revenue Service.

The reality is the IRS is a powerful well-resourced government agency that generally does not take no for an answer. Even when you think your tax bill may be erroneous in some area it still may be to your best interest to try and negotiate a reasonable settlement rather than get into a knock down drag out battle with the IRS.

Dealing with Tax Debt

The first rule of negotiating with the IRS is to make contact as soon as you realize there is some sort of problem or situation. If a tax deadline is approaching and you know you will owe more than you can pay it is time to get the ball rolling on a negotiation. Usually things start when the IRS sends you a letter informing you of an error in your return resulting in a higher tax liability than you anticipated or you have an already overdue tax bill. Don't pretend it will go away, it won’t. Set the negotiation process in motion as soon as possible.

Here are a few points you should be prepared to discuss on your first in-person contact with an IRS agent.

• Have the paperwork in hand to confirm your tax bill is correct and no obvious mistakes have been made.
• Research and question any penalties or extra charges that may have already been applied to your tax bill.
• Find out how long you have to pay before you incur further penalties and if that period can be extended while you seek other options.

Trying to do a tax debt negotiation on your initial phone call is generally futile. Use the first call to setup a meeting with an IRS agent that can discuss your situation. Don't put this off, doing so could set you up for increased additional penalties. If there is a large gap between the cash you have on hand to pay your tax bill and the outstanding balance you should come to the meeting prepared to offer some type of long term payment plan.

Why is Tax Debt Negotiable?

Many people believe that the IRS will never negotiate and that attempting to do so is a waste of time. But in reality, the IRS is similar in many ways to a credit card company or any business offering credit. They simply want to collect the money owed and they do not really care how they get it. Keeping it easy and simple is an advantage to both you and the IRS.

Like a business, they know collecting some money owed is better than not collecting any. In other words, the IRS would rather negotiate some sort of payment plan and have you pay off at least a portion of your tax bill, even if it is over a period of time, rather than see you end up behind bars with no ability to pay your back taxes. That is why there is always a window for negotiation.

Hiring a Tax Lawyer

Another option, when it comes time to do a tax debt negotiation on an outstanding tax bill with the IRS is to secure the services of a bonafide tax attorney. You can always try to negotiate your tax debt yourself, but if you choose to do so you should have at least a basic knowledge of the tax laws that apply to your issue.

If things get complicated or the IRS stonewalls you during a negotiation it will likely be in your best interest to get a lawyer. It is important that you hire a lawyer who specializes in tax matters, is used to dealing with the IRS, and knows the particulars of your situation well.

The IRS can be very intimidating to deal with under certain circumstances and an experienced attorney will know how to handle the situation in a way that benefits you and your case. Ideally, your lawyer will be able to bargain with the IRS and get you a reduced tax debt or a long term payment plan, or both.