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Advice on IRS Negotiation
By Darrin Mish
It does not matter how much you owe the IRS; they only need you to settle. Find out if the IRS is open to negotiating a compromise. This is where the Offer in Compromise enters. However, it is not that simple to solve your IRS problems. You must not have any investments, not earn sufficient money to settle your debt, and not own properties to be able to take advantage of an Offer in Compromise. You should be poor for the IRS to grasp that accepting the lesser amount of money you can give 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 determine what you have to offer? What are the special negotiating tactics that will help you essentially succeed in your efforts at reducing your back taxes? What amount you should pay back is something you can't simply guess. Choosing to settle a percentage of the figure of your total debt isn't recommended. The IRS will have you determine how much you're able to pay hypothetically. There are 2 IRS worksheets, Form 433-A and Form 656, that can help you calculate this figure. The negotiation starts when you file your Offer in Compromise, as well as supporting paperwork that's appropriate. If your first offer is not enough for the IRS, they will send a counter offer with a higher, if not the entire, amount. Do not worry if they come back with the full figure. There are many factors in this negotiation that can either help you or hurt you. As a benefit in many situations, the IRS will stop their current actions against you when you submit an Offer in Compromise. Until your Offer in Compromise has either been dismissed or accepted, efforts such as garnishing your wages will be generally put on hold. You still have other payment options to consider, even if the Offer in Compromise is dismissed. Rather than having to pay your total tax debt fully at one time, an installment plan can be negotiated. But to stop the interest from accumulating on your back taxes, it's still recommended to pay the whole amount as soon as possible. Bear in mind that the statute of limitations on your tax debt extends by the amount of time it takes to come to a decision from the moment you start the negotiating process by submitting an Offer in Compromise. The statute of limitations will be extended by a year if the proceedings requires a year for your case to be dismissed.
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May, 2012
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