Owing money to the IRS is stressful – especially if paying off your total debt would cause you significant economic hardship. If you face hefty tax debt, you may wonder: is it possible to negotiate with the IRS? In general, the IRS does allow qualifying taxpayers to apply for tax relief options that in some cases result in a lowered tax liability.
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- If individuals have tax debt that they cannot reasonably afford to pay without undergoing financial hardship, they can negotiate with the IRS to see if they are eligible for tax debt relief through options such as offers in compromise, installment agreements, and having their account listed as currently non-collectible.
- While taxpayers can negotiate with the IRS directly in hopes of lowering their tax bill, hiring a professional like a tax attorney can ensure they fulfill the specific tax debt relief application requirements and seek the resolution option best suited to their tax situation.
What Is IRS Tax Negotiation?
IRS tax negotiation allows taxpayers the opportunity to reach an agreement with the IRS to reduce their tax liability. An individual’s tax bill can grow for a variety of reasons, such as accrued back taxes, interest, fees, penalties, and more. If taxpayers fail to make payments toward their tax obligations, the IRS can take more serious action to secure payment, such as by issuing tax liens, levies, or wage garnishment.
How Can Tax Negotiation Lower Your Tax Debt?
Depending on the specific tax situation and eligibility requirements, there are several tax relief options that can result in a lowered tax liability for taxpayers who accrue tax debts that they cannot reasonably afford to pay.
The most common forms of tax debt relief that could be achieved during a tax negotiation include offers in compromise, installment agreements, and currently non-collectible status, which are all part of the IRS Fresh Start Initiative.
Offer In Compromise (OIC)
Taxpayers who qualify for an offer in compromise may be permitted to settle their tax liabilities for less than what was initially owed. In this situation, they will be required to pay a lowered amount in a lump sum payment.
An installment agreement allows taxpayers to pay off their tax debt through a payment plan of monthly installments instead of paying back their total balance all at once.
Currently Non-Collectible (CNC) Status
If the IRS agrees to list a taxpayer’s account as non-collectible, all collection efforts will be temporarily paused until their financial circumstances have improved and they can afford to make payments towards their tax obligation.
Can Taxpayers Negotiate With The IRS Directly?
If an individual is facing a tax problem, they have the option to reach out to the IRS directly to negotiate their tax debt. When negotiating with the IRS for a tax cut, taxpayers will have to apply for a specific form of tax relief. It can be challenging to understand the tax code and tax policy and to determine which tax reduction strategy will achieve the best outcome. However, with enough research, any taxpayer can acquire the knowledge needed to negotiate with the IRS.
Benefits Of Hiring Tax Professionals For IRS Tax Negotiation
Although taxpayers can contact an IRS agent directly in an attempt to negotiate their tax burden, there are many benefits to onboarding professional tax attorneys or certified public accountants (CPAs) to help them optimize their savings and speak with the IRS on their behalf.
There are specific application requirements for tax relief options that taxpayers may not be aware of, so oftentimes, a professional with up-to-date knowledge about tax reform and any tax increase or change in the tax rate and how it may impact their situation.
Hire Ideal Tax
If you need tax help from a tax service company to help you lower your debts, Ideal Tax can guide you throughout the process and help you apply for the tax relief program that is best suited to your situation.
For additional assistance with your tax planning, tax preparation, or filing your federal income tax return, contact us today for a free consultation.