How do Tax Professionals negotiate with the IRS? (And other items)
January 9th, 20071. Are you currently making payments? The IRS will look at what you’re currently paying and try to capitalize the payment into one lump-sum, which is the amount you’re expected to pay out. For example, if you’re currently paying $200 per month and the IRS times that one month’s payment by 48 or 60 (depending), the taxpayer has to offer at least $9,600 ($200 x 48), or $12,000, or more, before the offer will be considered. There are a few situations that can avoid this.
2. On the payment application form, the IRS asks how you are going to pay the amount if the amount is accepted. They’re getting at whether you either have hidden funds or that you have a third source. Offers to be paid by a non-liable party, such as Mom, Brother, Sister-in-law, often receive more favorable treatment. The IRS does this because they’re getting access to funds not otherwise available.
3. Never never offer zero. It’s a plain negotiating tactic. Even if your tax professional finds that the total amount due is legally in doubt (doubt as to liability), if any offer is submitted offering “zero” dollars, the offer will not even be processed. Sounds crazy? It’s always the better course of action to offer some amount, even if it is believed nothing should be paid.
4. This is a big one: don’t lie about assets. Tell your tax professional the truth about all assets. A lie detected will nullify the agreement and could, in extreme cases, lead to criminal prosecution.
5. This is also a big one after the IRS has accepted your offer: all tax returns and payments have to be processed timely for the next five years or the offer, if accepted, is subsequently revoked, and you’re left paying the original amount.
6. This last tip goes with previous one: always make your scheduled payment. Once in a payment agreement accepted by the IRS, errant taxpayers frequently default (miss a payment) and often end up with forced collection efforts, levies and the like. The agreement is null and void and you’re back at square one, or in most cases, having to pay the original tax liability amount.
