Conflict with the IRS is quite common, whether it is a taxpayer who forgot to mail in a tax return, an expatriate who has inadvertently neglected to claim foreign income, or an investor who accidentally racked up a huge tax bill after cashing in some stock options. In all these cases, and many others, it is often a valuable exercise to attempt negotiation with the IRS.
Many individuals do not realize that the IRS is open to negotiation and discussion. In fact, negotiating with the IRS can often be the best means of avoiding huge penalties for mistakes made on a tax return.
The IRS has the power to stop penalties or reduce your bill. They even have a number of methods, such as installment programs and offers in compromise, through which taxpayers can avoid tax debt by paying their bill over time.
Tips for Negotiating with the IRS
1.Research your case before approaching the IRS. If you are interested in entering into negotiations with the IRS, it is typically a good idea to research every possible area that might be of relevance to your case. Gather documentation to support your argument, as well as information related to any pertinent past precedents.
2. Meet IRS representatives face-to-face. If possible, it is always more advantageous to meet your IRS representative in person than answering questions over the phone. It is more likely that an IRS representative will be sympathetic to your case if you present it in person.
3. Keep calm and take notes. When dealing with the IRS, emotional control is highly important. Ask questions and be certain to jot down any answers, but avoid any emotional outbursts.
4. Make a good impression and keep in mind the position of the IRS. Remember, the IRS is meeting with you because they need your cooperation and, ultimately, because they hope to gather revenue from you. Building up a lot of unpaid taxes is not in the best interests of you or the IRS. However, the representative has to be able to make a case for you to the IRS, so make a good impression. The easier you make it for the representative to sell your case to the IRS, the more likely it is that you will get what you want.
5. Wait until the IRS proposes a plan that works for you. Be careful not to just agree to the first plan they propose. Wait for the plan that will best suit your needs, as well as those of the IRS.
6. Be realistic. Focus on the process of negotiation and not on the end result. Instead of immediately aiming for a resolution to the issue, stay focused on taking notes, listening, and getting the representative to talk and reveal the IRS’s position on your case.