IRS Negotiation Tips

The IRS only needs you to settle, regardless of how much you owe. Find out if the IRS is open to negotiating a compromise. This is where the Offer in Compromise enters. It’s not that easy to solve your IRS issues, however.

To be able to take advantage of an Offer in Compromise, you must not own properties, not earn enough money to settle your debt, and not have any investments. You must be poor for the IRS to grasp that accepting the small amount of money you can offer is more cost effective than going after what little you have.

So when you file your Offer in Compromise to the IRS, how do you decide what you must offer? What will help you succeed in reducing your back taxes? What amount you should settle is something you cannot just guess. Opting to pay back a portion of the figure of your total debt is not advised. What the IRS will make you do is calculate how much you possibly are able to pay. Two IRS worksheets can help you determine this amount – Form 656 and Form 433-A.

The process of negotiation can truly start as soon as you have submitted your offer and the needed paperwork. The IRS will send back a somewhat higher counter offer, or even the whole figure, if they do not like your offer. You are not at square one, though, if they come back with the entire amount. This is a negotiation, and when trying to fix your IRS problem, each meeting has many aspects that may hurt or help you.

As an advantage in many situations, the IRS will cease their present actions against you when you submit an Offer in Compromise. Until your Offer in Compromise has either been dismissed or accepted, efforts like garnishing your wages will be often put on hold.

Even if the Offer in Compromise is dismissed, you still have other payment options to consider. You can negotiate an installment plan instead of having to pay your whole tax debt in full at one time. However, to prevent the interest from accruing on your back taxes, it’s still advised to settle the total figure as soon as possible.

Another thing to keep in mind is that, from the moment that you file your Offer in Compromise and begin the negotiating process, the statute of limitations on your tax debt essentially extends by the period of time it requires to arrive at a decision. So if the proceedings requires a year for your case to be dismissed, the statute of limitations will be extended by a year.