Payment Arrangements

9 Rules for negotiating with the IRS

The notices are piling up, and you’ve reached the place where you’re thinking the un-thinkable: it’s time to negotiate with the IRS. Don’t panic; sit down, take a deep breath, and read on. Whatever you are trying to resolve, the approaches listed here will help…

The Oil Can is Mightier than the Sword.

Though you may be shaking in your boots, or angry as a hornet, don’t bring anguish or a bad attitude into the room with you. Put on a happy face, and pledge to keep a cooperative attitude. You will find that most IRS agents are ready to find a solution that benefits you both, so assume the best. If you run into a condescending, surly agent, ask the manager if you can work with someone else.

Solutions, Solutions, Solutions.

In addition to bringing spotless documentation, your job is to come with a solution prepared. And do yourself a favor – learn some of the IRS language. For example, ask for penalties to be ‘abated’ rather than ‘cancelled’; and get familiar with phrases like “reasonable cause”, “currently not collectible”, or “ordinary and necessary” business expenses etc.

Promises Promises.

Only promise what you can deliver. Don’t agree to pay more than you can afford – this is just setting yourself up for failure. Also remember that in addition to your negotiated settlement, you still need to pay this year’s taxes, so be reasonable. Practicing saying ‘no’ politely in many different ways, and keep those phrases at the ready!

Avoid the ‘Xerox-ballet’.

Get your papers in order. This means no papers spewing out of torn folders, no receipts tumbling to the floor at a crucial moment. Know what information you need to present, put it into category folders, and bring it in a nice tote. Now, that’s a great first impression.

Put a lid on it.

IRS agents are specialists in drawing out information. Be truthful, but keep your responses short, succinct and to the point. There’s no sense elaborating about your personal life – that may lead down the wrong road.

Scout’s Honor

Always tell the truth. Even ‘white lies’ will trip you up eventually, and will then cast doubt on everything you’ve said. Don’t hide assets, don’t try to cover things up. It’s not worth the worry, and if you’re caught you could end up in trouble that you can’t negotiate your way out of.

Be a seeker.

Come to them before they come at you. If you are in trouble, tell the IRS right away. Speaking up ahead of time may get you the extensions that you need – and by the way, the collection department notes in your file whenever you or your representative calls.

Get a grip.

Sit quietly in good humor. And stay seated – no rushing around the room, agitated, flinging your arms around. Above all don’t cry; the IRS does not appreciate drama. Remember that every agent writes down notes of how the interview went – you don’t want ‘hysterical’ to be at the top of the list for the next agent to see. If you feel out of your league or disrespected, end the interview and tell the IRS that you will be seeking representation and that you’ll get back to them soon.

Professional got your back?

Just filing your year-end taxes can be complicated enough! For complex tax issues where you need an educated opinion and guidance, seek a qualified tax professional. They have the knowledge and experience that can make a big difference in the outcome of your case.

For more information and assistance, visit: www.millertaxlaw.com

Settling IRS Tax Debts – your options

Settling IRS Tax Debts – your options
As we noted in the previous blog, the IRS has 10 years to collect any tax due. So you’re going to have to deal with this sooner or later, and interest and late payment penalties will continue to accrue while you figure out how you are going to pay your tax debt!
The first option is straightforward – pay off the entire amount owed, or at least send in a much as you can with the notice. You have 120 days to make this lump sum payment. (Even the IRS suggests that you look into paying with a bank card or bank loan because the interest rate and any applicable fees your credit card company or bank charges may be lower than the combination of interest and penalties imposed by the Internal Revenue Code.)
If you are unable to immediately pay your balance in full, then one of the Installment Agreements may be appropriate for you: they allow you to set up a monthly payment plan to pay taxes owed. However, each Agreement has requirements you must meet, there is a fee involved in setting up the agreement, and Interest and Late Payment penalties will continue to accrue while you make the payments. Also, you must agree to file all returns on time and pay your taxes on time in the future. Here are the general requirements for each – other restrictions may apply:
Guaranteed Installment Agreements – use this if you:
o Have a balance amount that is due is $10,000 or less
o If you haven’t filed or paid late previously
o All your returns are filed
o You are able to pay off your balance in 36 months or less
o You’ve had no previous installment agreement
o Can afford a minimum monthly amount of balance due divided by thirty
Streamlined Installment Agreements – use this if you:
o Have a balance amount that is due is $25,000 or less
o If you haven’t filed or paid late previously
o All your returns are filed
o You are able to pay off your balance in 60 months or less
o You’ve had no previous installment agreement
o Can afford a minimum monthly amount of balance due divided by fifty
Partial Payment Agreements
• If you can’t make the minimum payments of the previous Installment Agreements, you may want to look into this, as the payment plan is based on what you can afford after taking into consideration your essential living expenses. It also has the advantage of a longer repayment term. But be aware:
• The IRS may file a federal tax lien, which may affect your credit rating
• You must report your average income and living expenses for the past 3 months, plus provide paystub statements and other supporting documentation.
• The IRS routinely re-evaluates the terms every two years to see if you might be able to pay more.
“Non-Streamlined” Installment Agreement – use this if:
• Your balance is over $25,000
• You need a repayment term for more than five years
• You don’t meet any of the criteria for a streamlined or guaranteed installment plan
Again, be aware that this route will most likely result in a federal tax lien, and there will be financial papers that have to be supplied to an IRS agent so they can analyze the most you can afford to pay each month.

In our next Blog, we’ll cover the other three options for settling your tax debts:
Offer in Compromise
Not currently collectible
Filing Bankruptcy
As with any tax problems, taxpayers should seek the advice of a licensed tax professional. For more information, see: www.millertaxlaw.com