General Tips on How to Negotiate with the IRS for Back Taxes

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There will come a time when an average Joe will have to go head to head with the IRS. Going into a negotiation with a government agency that holds more power than
you do can be a daunting prospect, to say the least. Nevertheless, the method
in which you approach the negotiation can dramatically affect your chances of
success.

Whether you are clarifying a misunderstanding, setting up an installment agreement,
submitting an offer in compromise, dealing with an auditor, or worse yet,
answering a knock on your front door by an IRS agent, you will need some basic
negotiation skills.

Tips to negotiate back taxes:
DO NOT LIE to the IRS. It is in your best interest to always tell the truth when
dealing with the IRS. Lies rarely go unchecked, especially with an agency whose
job revolves around finding inconsistencies in your records. Once you are
caught in a lie, you will lose credibility with the IRS, and they may even look
at you as a suspect. Bear in mind, some lies may land you in jail, especially
if they are on forms and signed under penalties of perjury.

Don’t talk too much. Disclosing too much information might come back to bite you. When speaking to an IRS agent, be succinct and straight to the point. Some agents
might try to put you under pressure in order to squeeze more information out of
you than you are obligated to give. Do not get intimidated, and be firm and
concise with your answers.

Be informed about crucial deadlines.
Some collection notices carry critical deadlines which can stop collection
action before it happens. If certain deadlines are missed, you could lose your
ticket to the United States Tax Court. Without an objective party between you
and certain collection action, you may be at the mercy of the IRS if certain
deadlines are missed.

Be aware of collection statutes of limitations.
When you request Collection Due Process Hearings, request Offer In Compromises, initiate litigation in court, file for bankruptcies, or a slew of other actions, you may be stopping the collection expiration statute, which might be against your own interest in certain cases. Be conscious of what you are doing and how it could affect your case.

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.

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.

Go to them before they come at you.
Generally, it is better for a taxpayer to come into compliance with the IRS
than for the IRS forcing you into compliance. This shows cooperation and a
willingness to resolve a tax debt, which the IRS will appreciate by giving you
more options and leniency in your case. For example, if you can’t make a
payment, call the IRS and let them know in advance. Explain your situation.
They will likely grant you the extension you need.

Use IRS terminology.
This will show an IRS agent that you know what you are talking about. Using IRS
terminology will grant you more respect during a conversation. For example, if
you are negotiating an Offer in Compromise, know the difference between RCP
(reasonable collection potential), disposable income, and monthly income and
use them correctly during the negotiation.

Know when to stop the interview and get help.
You thought you could do this all by yourself, but now things are getting tricky, you are overwhelmed, and you are definitely out of your depth. That’s ok, take a deep breath, stop the conversation, and simply inform the agent that you will be seeking representation.