Of the various types of financial debts, owing the IRS money for unpaid taxes is among the worst. Not only are most tax debts non-dischargeable in bankruptcy, but the IRS has powerful tax collection tools, such as tax liens and levies.
Despite the upper hand the IRS often has when it comes to tax enforcement, there’s still room for negotiating with the IRS. These talks can arise when trying to settle a tax debt for less than the full amount, comply with an audit request, or appeal an IRS decision. No matter what you’re negotiating, keep the following tips in mind.
Tip #1: Follow IRS Instructions and Procedures
If there are special procedures or rules for something, such as filing an appeal or requesting tax relief, follow these explicitly outlined steps unless the IRS or a qualified tax professional says otherwise. The majority of people you might interact with at the IRS are overworked and probably under a lot of pressure to process cases and requests as quickly as possible.
This is particularly true given the current political climate and how the IRS is an easy target for many politicians on both sides of the political aisle. So the last thing you want to do is ask the IRS for something without following instructions, as it gives the IRS an easy way to reject your request.
If an IRS worker can undermine your negotiating position on a technicality in 30 seconds instead of taking five minutes to review the merits, you have to assume they’ll take the path of least resistance.
Tip #2: Have All Relevant Information Before Contacting the IRS
If you receive a tax notice or letter from the IRS informing you about an outstanding tax balance, there will probably be a phone number, fax number, and/or address for you to use to address the concern. Before reaching out, make sure you know the relevant facts to your case, as well as have any necessary documents.
For example, if you think you can lower your tax bill with First Time Abate penalty relief, it might be a good idea to confirm your history of good tax compliance by obtaining your tax transcripts and records from the IRS.
Tip #3: Be Polite and Considerate
Even if you believe the IRS is the most evil organization in the world, is an unconstitutional overreach of federal power, or all of the above, when you talk to an IRS employee, treat them with respect. Remember that they’re people too, so they have feelings and emotions, as well as families, personal struggles, and financial challenges.
Therefore, making them angry, mad, or offended is unlikely to help your case, and neither is deliberately trying to make their job more difficult. If the IRS employee sees you’re trying to be reasonable and accommodate their position, they’re far more likely to do so with you.
This is especially true during audits, where you might need more time to respond to an IRS request for documents or information. If you’ve been prompt with prior responses or accommodating to the revenue agent’s busy schedule, they’ll be more willing to accommodate you if you need an extension or a meeting rescheduled.
Tip #4: “If Mom Says No, You Can Always Ask Dad”
IRS employees aren’t your parents (although it might feel that way sometimes, and not in a good way), but you can still follow the strategy of not giving up just because one parent says no to your request. Depending on your tax case, if you call the IRS to make a request, the first person you call might say no. Don’t accept this is the final decision from the IRS and instead try calling again to ask a different IRS employee.
IRS employees sometimes get things wrong and make incorrect decisions or make mistakes with the information they give taxpayers. Or, there’s a chance you reached out to someone when they were having a bad day. As a result, it’s a good idea to try speaking with someone else who might be more willing to hear your side and negotiate a resolution that’s more favorable to you.
Tip #5: “Trust, But Verify”
If the IRS makes a decision or gives a response you disagree with, ask for the legal basis for the decision. Whether it’s a court case, IRS regulation, federal statute, or internal policy that controls how the IRS is supposed to handle your situation, you want to know what it is so you can double-check what the IRS is telling you. This information will also come in handy if you decide to challenge the IRS’ decision, whether in court or through an informal appeals process.
Consider Talking to a Tax Resolution Professional
Negotiating with the IRS is a lot like any other negotiation. The problem is that not everyone likes to negotiate or feels confident doing so. Then there’s the time and effort required to negotiate with the IRS. Hiring a tax professional can help with these potential negotiating hurdles. To learn about what Kienitz Tax Law can do for you when negotiating with the IRS, contact us to schedule a free consultation.