February 26, 2010
Tips on IRS Negotiation
It does not matter how much you owe the IRS; they just want you to pay. Find out if the IRS is open to negotiating a compromise. The Offer in Compromise enters in this case. However, it is not that simple to solve your IRS issues.
You must truly be poor to settle your IRS tax debt for pennies on the dollar because the IRS is really good at getting the money that they are after. That means that you don't have any investments or assets, no equity in any properties you may own, and you're not making enough money to offer any evidence that you would ever be able to settle your debt. Only when the IRS fully realizes the plight of your situation will they feel that accepting a lesser amount of money and wiping the slate clean is more cost effective than going after the minimal value of the assets that you do possess and ending your IRS problem.
Of course, when negotiating an Offer in Compromise, you simply can't pick any amount on back taxes that you want to pay the IRS. The IRS will make you determine what you can hypothetically pay. Forms 433-A and 656 can help you determine this amount.
When you file your Offer in Compromise and the appropriate needed paperwork, the negotiation starts. The IRS will send a counter offer that is higher, sometimes the entire, amount if your first offer isn't enough. If they come back with the entire figure, don't worry. This negotiation has various nuances that can either hurt you or help you.
As a benefit in many cases, the IRS will stop their present actions against you when you file an Offer in Compromise. Until your Offer in Compromise has either been dismissed or accepted, efforts such as garnishing your wages will be normally frozen.
But even with the dismissal of your Offer in Compromise, other payment methods will be made available to you. You may be able to negotiate an installment payment plan which would buy you time to earn the money and make minimal payments, instead of paying in full at one time. However, your back taxes will still accrue interest. So even if you negotiate an installment plan, you will want to pay off the total amount as soon as possible to avoid prolonging your IRS issue.
Do remember that when you submit an Offer in Compromise, the statute of limitations on your tax debt is essentially extended. Meaning, your statute of limitations is extended for another year if your case requires a year to process.
Originally posted 2008-11-08 22:15:11. Republished by Blog Post Promoter
Filed under Blog by IRS Tax Attorney
