How do I negotiate a settlement with the IRS for back taxes? I'd rather not burn money on an attorney.

Question

How do I negotiate a settlement with the IRS for back taxes? I'd rather not burn money on an attorney.

Answer 1

I am going to have to agree with v.b and dave on this one.

Answer 2

vb's answer is right on.  You can get form 656 from the IRS web site at www.irs.gov in the forms section, left hand side, near the top.  There is $150 fee the IRS charges to process your Offer In Compromise (OIC).  In addition you have to send a check in with your OIC for 20 percent of the amount you offer.  There is a worksheet in the form 656 to help determine your offer amount.  An Attorney or Tax Professional will charge you hundreds if not thousands to complete the form 656.

Answer 3

Any information you would need from the IRS would be found at www.irs. gov.

You might want to do some other research or consult with an enrolled agent as there are some things that you can do that will increase your chances of an offer in compromise being accepted.

Answer 4

Before you make a decision there is something you should do.  Since you owe back taxes I am assuming you have liens filed against you.  You did not give much detail.  If you have liens, please check to see when they expire.  If they are old liens, you might be pleasantly surprised that one or all of them have expired.  Look in column (e) for the expiring date.

Answer 5

OICs are only good if you owe over $10,000. If you owe under $10k, enter in to an installment agreement. If you owe over $10k and you can't pay it, you can try an OIC.

Keep in mind that it is a rather complex process. The "form" for the OIC is 44 pages long and the IRS says "No" over 80% of the time.

Answer 6

Get the OIC form 656 and start filling it out.

This is what they would have done for a fee anyway.

Answer 7

You can prepare the forms yourself or you can retain an experienced tax practitioner to do it for you. It is impossible to state which option is better for you. Generally stated, the more you owe and the more you have the more you need professional help. If you do it yourself, do a draft copy in pencil first.

I am an enrolled agent who specializes in representing taxpayers with balance due problems like yours and if you wanted my services, you would have to pay me to handle it (lots less than an attorney or the companies that advertise on TV, but well more than zero.)  You may be able to fix your own car but may decide to go to the mechanic at the garage.  You could also cut your own hair but it wouldn't be wise.  A professional practitioner should know how to present your case in the best light or to tell you honestly that another way of dealing with the problem is better.  

If you want some information outside this forum, you can email me by clicking on my profile.