Negotiating With IRS Collection Officials

In our previous tutorial, How to Deal With IRS Collection Agents, we gave you general pointers on the best way interact with Revenue Agents and ACS collection representatives.

This tutorial addresses the actual negotiation process in connection with Installment Payment Agreements and Offers in Compromise.

IRS Payment Plans and IRS Settlements Are Negotiated

Many people believe that the IRS unilaterally dictates the terms of an installment payment or agreement or the amount of a settlement offer.

This is not true.

When a taxpayer files a request for an installment agreement or makes an Offer in Compromise, it triggers a process that involves several telephone and in-person conferences and the exchange of numerous documents and correspondence between the IRS official assigned to the case and the taxpayer’s lawyer or CPA.

Even if the application for relief was prepared properly, the IRS agent has only limited knowledge of the taxpayer’s circumstances and his or her ability to pay the tax debt in full.

Therefore, the information provided almost always requires clarification or updating.

The Role of your Tax Lawyer or CPA

One of the critical roles your tax representative plays is convincing the IRS agent to agree to a collection alternative that is in your best interests. This is done is by convincing the IRS that it is also in the government’s best interests.

An experienced tax professional knows the IRS guidelines for installment agreements and Offers better than (or at least as well as) the IRS agent does.

In addition, he or she should make the IRS agent aware that he intends to protect your rights at every stage of the process, including, if necessary, the following actions:

• Soliciting the assistance of the Taxpayer Adovocate
• Appealing the decision or proposal of the IRS agent
• Filing an abuse of discretion suit in Tax Court

It is important for IRS officials to know that the taxpayer has a representative who is not only aware of his client’s rights, but willing and able to defend them at any stage of the proceedings.

A thorough understanding of the collection process is critical to obtaining favorable payment terms or a reasonable settlement of your tax debt.