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Dealing with Debt: Negotiating with the IRS

There is no doubt the IRS is aggressive in collective its debt. But it doesn’t have to become an oppressive debt for the citizen. There are ways you can work with the IRS to get your tax debt paid.

Double Check Your Tax Returns -- Always

The first thing to do is double-check your returns to make sure you didn’t overlook deductions that would bring down your tax bill. If you find deductions to apply, you must file an amendment to your returns. Then you can decide how to negotiate the rest of the debt.

Compromising What You Owe

One of those ways is to offer a compromise on what you owe. You will need to fill out certain forms depending on your particular circumstances; check with the IRS to learn which ones you need. You will be making and offer to pay a certain amount of the tax you owe, and allowing them to apply your refunds as partial payment until the compromise is no longer necessary. Although you are not paying the full amount of tax you owe, offer a reasonable amount or your offer will not be accepted.


A Payment Plan with the IRS

You can also offer the IRS a payment plan. It’s best to have a tax specialist help you decide how much to offer per period, but you will, in essence, be making monthly payments on the full amount of tax you owe.

Take Advantage of Tax Amnesty When Available

You may also consider taking advantage of tax amnesty. This program is designed to collect as much of your tax debt as possible over a few months’ time. The drawback of the amnesty program is that if you don’t pay the entire amount negotiated by the end of your amnesty period, the IRS can impose penalties that are larger than normal.

Currently Not Collectible Statues

If you have an enormous financial hardship, you may want to have the IRS declare you Currently Not Collectible. This means that until your financial situation improves, the IRS can only send you a yearly reminder of what you owe. During the amnesty period, The IRS can neither take steps to collect those taxes, nor can it send you a bill. Remember that there is a 10-year statute of limitations on collecting taxes owed; this time continues to tick while you are considered Currently Not Collectible.

Remember IRS Penalties and Interest Charges

Remember that the IRS charges penalties and interest on unpaid taxes. It may be cheaper for you to get a loan from a bank than to subject yourself to IRS charges. In any event, if you are able, you should hire a tax consultant or attorney to help you decide which avenue to take, how much you can afford to pay, and help you prepare the forms and documentation for the IRS.