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Negotiating Tax Liabilities with the Internal Revenue Service (IRS)

Have you ever been indebted to the Internal Revenue Service? The good news is that you can negotiate outstanding tax liability with the IRS. Keep reading to learn more!

How to Negotiate Back Taxes with IRS

In 2011, the IRS started its Fresh Start Program, which allows you to negotiate your tax liabilities or debts in the following ways:

  • You can propose an installment agreement plan.
  • You can opt for tax relief with an Offer in Compromise (OIC).
  • You can ask the IRS to postpone collection until your financial situation improves.


Reduce Your Tax Bill with an Offer in Compromise


An Offer in Compromise (OIC) allows you to settle your tax debt for less than you owe. This procedure could help to reduce your tax debts by thousands of dollars.

This option is best for people who cannot offset their entire tax liability. Therefore it is a good option if paying your debt would cause you financial hardship or if you are from a low-income family.

To determine your eligibility, the Internal Revenue Service will consider the following factors:

  • Your ability to pay
  • Your anticipated future income
  • Your expenses
  • Your asset equity

The Tax Debt Negotiation Process

To negotiate your IRS tax debt under the Offer in Compromise, you need to be sure you qualify. The IRS has a pre-qualifier that can help you determine if you qualify ahead of time to make things easy. If you do not qualify, the IRS will refund your application fee.

Once you are sure you qualify, you need to determine a minimum offer amount. This amount is the bare minimum that the IRS will accept. The IRS defines this amount using the financial declarations you made in Form 433. To improve your chances, consider consulting with an IRS Tax Attorney.

The most important part of negotiating your entire tax liability is to start filing early. When you file early, you will be able to avoid the fines that come with the late payment of taxes.

Your application must be convincing. First, the IRS needs to know how soon you intend to pay the required estimated tax payments.

Also, your payment plan should follow IRS guidelines and should not take too long. An ideal installment payment plan falls within six months or two years.

You might also need the help of a tax professional. Perhaps an Oklahoma Tax Attorney could help you navigate the negotiation process.

Frequently Asked Questions

Does the IRS Offer Tax Relief?

Under the Offer in Compromise program, you might qualify for tax relief. That means you pay less than you owe the IRS in unpaid taxes.


Can You Negotiate with the IRS on Back Taxes?

Yes, the IRS accepts negotiations for a taxpayer’s tax liabilities. However, the debts will not disappear; instead, you get a more manageable payment plan for your IRS debts.


How Do I Negotiate Back Tax Payments with the IRS

It involves a long process that starts with obtaining a form and paying the required application fee. You will find step-by-step instructions on the IRS website.

You might have to seek professional help from a tax attorney.


Will the IRS Settle for a Lesser Amount?

Yes, the IRS can reduce your tax debt under the OIC program but only if you meet the requirements.


What Percentage Will the IRS Settle For?

The taxpayer must offer 20% of his total tax debt as an initial payment to the IRS.


Does the IRS Forgive Back Taxes?

The IRS can forgive back taxes, but it happens on rare occasions.


How Much Should I Offer in Compromise to the IRS?

Your offer should equal the IRS reasonable collection potential calculated for you or more.