9 Rules for Negotiating With the IRS

May 16, 2012 by  Filed under: Taxes 

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.

Martha Miller, Attorney at Law is admitted to the Bars of New York, Connecticut and the US Tax Court. She is a 1967 graduate of Northwestern University School of Law in Chicago Illinois.

Martha has been in the tax field since 1972, at first working for H & R Block in New York, preparing taxes, teaching tax preparers, representing clients at audits and managing an office for the company. Her experience on the front lines of tax work allowed her to learn the field from the ground up.

Martha now restricts her practice to personal and business income tax.
She writes about 400 tax returns a year, though the returns now are more difficult than the ones she wrote when she started out. In her career, she has prepared more than twenty thousand tax returns.

Martha is also the author of What Every Woman Needs to Know about the Law (Doubleday 1980) and numerous articles on legal matters. For more Information visit http://www.millertaxlaw.com

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