How to Negotiate Tax Debt

Find the right negotiation tactics to fit your financial situation.

You might be the best bargainer in the family. Negotiating savvy deals for automobiles, property or the terms of your new job is a valuable skill, to be certain. Negotiating with the IRS over a tax debt, however, presents a unique set of challenges.

Before you roll up your sleeves to tackle any tax issue, you have to consider what you truly have in front of you. Fortunately, there are some smart moves you can make that will ultimately yield positive results. It’s helpful to first review what options you have, with respect to the specifics of your situation so you have a better idea of how to negotiate tax debt effectively.

Negotiating Stance No. 1: You can’t pay all at once

Many delinquent taxpayers have found that although they can pay their IRS debts, they can’t pay them all at once. If this more or less describes your situation, you may want to consider a tax payment plan. The IRS will typically accept monthly payments with an installment agreement; this will give you several years to resolve your total debt. You may be asked to provide certain financial details when you make such a request (more on this in a moment), and you’ll be expected to make your payments on time, without fail. If you miss a payment, you can default and essentially fall back to square one.

Negotiating Stance No. 2: You can’t pay anything

It’s possible that when the IRS sends you a notice of assessment, it will come at a time when you’re having trouble meeting your normal financial obligations. If the addition of a tax debt presents you with a hardship, endangering your essential living expenses, you may not have to pay anything; not right away, anyway. The IRS may consider you Currently Not Collectible if you lack the resources to make payments for your balance. This status will prevent you from being subject to IRS collection activity until your financial situation improves.

Negotiating Stance No. 3: You’re short on time

In addition to income restrictions, you may also have little time to spend handling a tax resolution. Unfortunately, you’re provided only a brief period to establish a formal resolution when you have a tax debt. If you fail to make timely efforts, you become vulnerable to IRS collection efforts. These might include a wage garnishment or even a levy against your bank accounts. If you’re scrambling to find the right tax solution and you can’t fight the clock, you might just want to streamline your approach.

Negotiating Stance No. 4: You need someone else to negotiate for you

There’s no shame in enlisting a seasoned professional to handle a problem. Whether you’re expected in court or you have to replace the transmission in your car, it may simply make more sense to call on the services of a qualified expert. When you’re trying to simplify your tax debt negotiation, you may want to talk to a licensed tax professional. He or she will review your situation and quickly suggest a resolution, one tailored to your finances.

If necessary, a tax professional can also negotiate with the IRS on your behalf. This may be in your best interest, especially if your goal is to get the lowest monthly payment allowable by law. The tax pro understands precisely what the IRS must receive in order to approve a resolution, and what information does not need to be included (to avoid weakening your position). No matter what, when you negotiate tax debt it needs to be handled promptly and with a certain amount of finesse to ensure you get the best deal possible.