November 17, 2008
Tips on Negotiating with the IRS
It doesn't matter how much you owe the IRS; they just need you to settle. Find out if the IRS is open to negotiating a compromise. The Offer in Compromise comes in in this situation. Unfortunately, it is not that easy to solve your IRS issues.
The IRS is really effective at collecting the money that they're after, and to be able to really settle your IRS tax debt for pennies on the dollar, you must truly be poor. You should not earn sufficient money to pay off your debt, must not have any equity in the properties you own, and should not have assets or investments. Only when the IRS fully realizes the plight of your case will they decide that accepting a small amount of money and wiping the slate clean is more cost effective than going after the small value of the assets that you do own and ending your IRS problem.
Of course, when negotiating an Offer in Compromise, you just cannot decide on any figure on back taxes that you wish to pay the IRS. What you can pay hypothetically will have to be properly determined by you, as ordered by the IRS. Forms 433-A and 656 can let you determine this figure.
When you submit your Offer in Compromise and the appropriate necessary paperwork, the negotiation begins. The IRS will send a counter offer that's higher, sometimes the full, amount if your initial offer is not sufficient. Do not fret if they come back with the entire amount. There are various nuances in this negotiation that can either help you or hurt you.
As a benefit, all IRS actions against you will stop by filing an Offer in Compromise. All enforcement actions are put on hold until the Offer in Compromise is dismissed or accepted.
Even if the Offer in Compromise is dismissed, you still have other payment options to think about. You can negotiate an installment plan rather than having to pay your whole tax debt in full at one time. However, it's still recommended to pay the entire amount as soon as possible to prevent the accumulating interest on your back taxes.
One thing to bear in mind is that, from the moment that you submit your Offer in Compromise and start the negotiating process, the statute of limitations on your tax debt basically extends by the period of time it takes to arrive at a decision. The statute of limitations will be extended by a year if the proceedings takes a year for your case to be dismissed.
Filed under Blog by
