Tax Tip #5: Don’t call the IRS – at first, anyway.
If you are currently behind on your taxes or in need of IRS help, then this article series is for you. We have included 6 tax tips on how to negotiate with the IRS, and how to improve your outcome. The IRS is the nation’s most powerful and most effective collections agency. When they talk to you, their goal is to collect a debt. When the IRS gets you on the phone, they will ask you a series of questions:
- How much money do you have?
- How much available credit do you have?
- Can you borrow from friends or family to pay the IRS?
- Who is your employer?
- Where else do you make money from?
- Can you afford to pay off the amount you owe the IRS in full or in part today?
The IRS will ask you these questions before they even let you ask them a question or dispute the validity of the debt. Depending on how far along in the IRS collections cycle your case has progressed, the IRS will even use this information to levy or seize bank accounts, wages, or other assets from you. This is not what you would call IRS help!
When attorneys are going to court, they first go through a process called “discovery.” Discovery is the process of getting all of the facts of your case together and organized plus finding out the details of your opponent’s case. Considering that when you call the IRS they may find a way to take property from you, you want to be overly prepared before you ever speak with the IRS on the phone. Do your own discovery.
Here is a checklist of things to make sure you know before you call the IRS Help line:
- How much does the IRS believe you owe them including penalties and interest
- How much do you believe you owe the IRS
- If you believe you owe the IRS less money, what facts do you have to back up your claim
- What resources do you have available to pay off the IRS
- How much can you afford to pay them each month (caution: the IRS doesn’t care about your cable bill or your child’s Montessori school. The IRS expects you to cancel those things in order to pay off your IRS debt.)
- Is your name somehow tied to someone else’s assets (for example, is your name on a family member’s bank account? The IRS may levy or seize money from any bank account with your name on it)
- Are all of your back tax returns filed
- How much time does the IRS have to collect this debt from you before the Statute of Limitations expires
The IRS is a regulatory agency. This means they have set procedures and guidelines. The IRS agent on the other end of the phone has certain questions he must ask you and certain actions he must take. The IRS agent may feel badly about whatever excuses or heart-breaking circumstances you have, but he/she is trained to only consider the facts and to collect a debt. Before you call the IRS for help, make sure you know all of the facts. This will boost your confidence, it will improve your negotiation, and it will keep you more in control of your outcome.