Are you wondering if it’s possible to negotiate tax debt with the IRS? The short answer is that yes, the IRS will allow you to settle your tax debt via a payment plan or debt relief. You often don’t even have to sit face-to-face with an IRS agent. The entire process can usually be taken care of in a few easy steps if you bring in a tax professional to help.
Let’s look at how to negotiate IRS tax debt using available relief options.
Can You Negotiate Tax Debt?
The IRS will sometimes let you pay much less than you actually owe in taxes using an option called Offer in Compromise (OIC). To qualify, you must convince the IRS that you’re unable to afford what you owe. You can make this reduced payment using short-term installments or one lump sum.
An OIC won’t be on the table for everyone, but if you are denied one, you still have other options. The IRS may assign you a Currently Non Collectible (CNC) status if you can prove financial hardship. This option essentially negotiates your debt down to nothing temporarily. The actual length of your CNC status will depend on what the IRS assesses when it reviews your case in the future. It’s possible to ride out CNC status until your debt expires.
A negotiation by default sometimes occurs if your debt reaches its expiration date. Many people don’t realize that tax debt has a statute of limitations. This period usually lasts for 10 years following your date of assessment. You will be free from your debt and any accompanying penalties if the IRS hasn’t intervened already. Of course, it’s important to get the help of a tax professional if you believe your debt is about to expire because the moves you make today could impact what happens next.
You may also negotiate an Installment Agreement (IA) with the IRS. If approved for this option, you will pay a manageable chunk every month until your debt is paid off. A payment plan is actually the most common solution when determining how to negotiate tax debt with IRS agents.
Another alternative is Innocent Spouse relief. You can apply for this if you’re facing penalties due to a tax return filed on your behalf by a current or former spouse. Innocent Spouse status can apply in cases where errors were fraudulent or accidental.
How Does It Work?
The IRS will review your application for the form of debt negotiation you select. Keep in mind that each option has its own list of requirements. This is why it’s highly recommended that you seek the help of professional tax experts before reaching out to the IRS. Hastily applying for a program could cause your request to be rejected due to errors. What’s more, the program you apply to may not be a good fit. You also risk providing the IRS with details that contradict your claim that you’re unable to pay your tax debt in full.
You will mostly be free of serious penalties like interest fees and liens once you are approved for a relief program. It’s also possible to negotiate to have an order for a wage garnishment revoked.
How to Negotiate Tax Debt With the IRS
Negotiating tax debt with the IRS typically means submitting the right application forms and all accompanying documentation. However, you may need to handle your case on an in-person basis if you’d like to appeal an IRS judgment.
The first step to negotiating your tax debt is getting a tax expert working on your behalf. Your tax advocate will look over your situation, let you know which option is best, and get your application in as quickly as possible.
Can I Negotiate My Tax Debt With the IRS?
Every taxpayer is eligible to negotiate tax debt, but not every option is available to every taxpayer. Things like your income level, debt amount, and circumstances will determine which options are appropriate for you.
The one thing that everyone has in common is that they cannot qualify for tax debt negotiations unless they are current with all tax returns. If you have unfiled returns, make sure to get them taken care of before attempting negotiations with the IRS.
Why Tax Group Center Is the Right Choice for IRS Negotiations
Tax Group Center knows how to negotiate tax debt with IRS representatives. Let us start by making sure you’re fully caught up with all late tax returns. Once we’ve negotiated your tax debt, we can help you stay current with your obligations to avoid having your relief agreement invalidated. We’re a team of CPAs, lawyers, and tax professionals with the passion and expertise needed to help people get a fresh start after tax debt. Call today and put our experience to work for you!