Essential tips for negotiating with the IRS
It can be an overwhelming experience to deal with an agency like the IRS but there are some things you can do to navigate that experience successfully. It is important that you open the letter as soon as it comes, and contact them immediately. To quote the IRS site: “Don’t panic. If you cannot pay the full amount of taxes you owe, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040.”
The problem won’t go away and there will be a deadline that has consequences you probably don’t want. Many times an expert can help you understand what your options are. A Certified Public Accountant(CPA), tax attorney, or Enrolled Agent has the experience you lack to know how to deal with this. Sometimes, they can show that the IRS made a mistake and resolve things immediately.
Remember that you are one case in many. It is your responsibility to keep accurate records of all your communications and any paperwork that applies. If nothing else, have a box to put it all in but using file folders will help you find what you need. Bring the pertinent paperwork to any meeting. You are dealing with human beings who work with many, many cases. If you get angry, communication will shut down. Be calm, friendly, and firm about what you need. Call back as often as required, but make those calls diplomatic.
Be compliant in your taxes. This means you have filed all the right papers and are paying what you are able to on your taxes. If you aren’t sure you are compliant, talk to that CPA, tax attorney, or Enrolled Agent. Having filed and paid the minimum $25 shows you are not evading your responsibility.
Don’t use a credit card to pay your taxes…the IRS installment plan is more likely to cost less in interest over time even though it is suggested on this link. It is important to read the IRS material carefully because you are expected to go through specific steps by the time you talk to someone.
Know what you will be able to pay per month, both the minimum and maximum. Be realistic about rent, utilities, and food but expect to cut cable and other luxuries. An offer in compromise might be possible if you truly cannot pay your full tax liability without creating financial hardship. To see if you qualify, use this tool on the IRS site. You may be able to settle your tax debt for less than the full amount you owe, but it is a process that follows very strict guidelines.
The biggest mistake one can make with the IRS is ignoring their communications. If you don’t talk to them, it will be assumed you are trying to evade taxes. This isn’t an evil empire out to take over the world, this is an organization full of working people who deal with a lot of confusing paperwork and millions of cases that usually are resolved. They encounter tax evaders regularly, so if you act like one, how would that IRS representative know any different? You need to prove you are different by acting responsibly and communicating regularly.
Sources: http://www.irs.gov/uac/What-if-I-can%E2%80%99t-pay-my-taxes%3F, http://www.irs.gov/Individuals/Payment-Plans,-Installment-Agreements, http://www.irs.gov/Individuals/Offer-in-Compromise-1, http://irs.treasury.gov/oic_pre_qualifier/
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