There are instances that you can negotiate with Internal Revenue Services, especially if the tax issues are straightforward or you are comfortable with the process. This article will walk you through all these instances and further provide more details about them.
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Currently Not Collectible Status (CNC)
Currently, not collectible status involves a situation where you owe back taxes, and you’re struggling to pay them back. In these instances, you get to negotiate with the IRS to save your grace.
Consider CNC status as hitting the pause button on IRS collections. When your account is placed on CNC status, it means they agree you are in a dire financial situation, and you can’t be able to pay your taxes at the moment. This means you won’t receive letters, garnished wages, or levied bank accounts at least for now.
Payment Plans (Installment Agreements)
You may get to negotiate with the IRS when you want to make payment plans. This is a situation where you make an agreement with the agency to pay your federal tax over time. You can set up the meeting online, by phone, or physically. The internal revenue systems will provide you with short-term and long-term options. Click here to learn more about the US federal tax brackets in 2024.
- Short-term payment plan
This provides you with the option to pay off your tax debt within the next 180 days.
- Long-term payment plan
A long-term tax payment plan, also called an installment agreement, gives you more than 180 days to settle the tax bill. You can choose to pay off in monthly installments for up to six years.
The plan you can work with depends on how much you owe and how fast you can pay the tax. As long as you keep up with the plan, the agency usually won’t issue a tax levy or a tax lien.
Offer in Compromise (OIC)
You can negotiate with the IRS by yourself when you are considering an offer in compromise OIC. This is a repayment plan with the Internal Revenue Service where you can propose paying a lesser amount, and the IRS will forgive the remaining balance.
However, there are very stringent requirements for applying for a compromise offer. For starters, you must exhaust all your means of repaying the debt, and you can’t file for bankruptcy.
The IRS will agree to OIC when:
- There is a situation where the internal revenue services can collect the amount more like doubt to collectability offers.
- When there is a genuine doubt about the accuracy of the amount you owe, that is doubt as to liability offers.
The main aim of OIC is to reach a settlement that is in the best interest of you and the government. You will be given a fresh start and an opportunity to comply with any future obligations voluntarily.
Penalty Abatement Requests
If you are charged with a penalty but you believe you have a reasonable cause, for example, casualty or disaster, for not complying with the tax laws. You can negotiate with the IRS and request a waiver of penalty, also called an abatement of penalty.
This way, you get to exist when you show that you utilized ordinary business care and prudence and were still unable to fulfill the requirements for filing your return and paying the amount you owe on time.
To request a waiver of penalty, you will write to the address on the notice you received and provide a detailed explanation of your situation and any documents that will support your circumstances. The Internal Revenue Service will review the request and respond in writing. If you have further questions, you can contact them on the phone number written on the notice or go there in person.
There are also instances that you may work with an attorney. A lawyer like the Charlotte NC tax attorney will help with the negotiations. The IRS will then provide charge abatement, eliminating or minimizing your fees.
IRS Fresh Start Program
The Fresh Start is an initiative designed to help taxpayers and small business owners resolve their unpaid tax debt and get back on track. This is another situation where you get to negotiate with the IRS. But before doing that, you must be familiar with the initiative and determine your eligibility.
Read more on How to Apply for the IRS Fresh Start Program
Responding to IRS Notices
This is another scenario where you can negotiate with the Internal Revenue Service after they send you a notice. However, there is no need to reply instantly unless they instruct you to do so. If they request you to call or come, ensure you have a copy of your tax return and IRS notice in hand.
Conclusion
There are many instances where you can negotiate with the Internal Revenue Service’s yourself, these include, in currently not collectible instances, when discussing payment plans, when you are considering an offer in compromise, when requesting for a waiver of penalty, or when you want to start anew.
