Tips for Dealing with the IRS

In many ways, conducting business with the IRS is not unlike any other deal or negotiation. Ideally, the conversation should be comfortable and sincere. Both parties need to be governed by a truthful, straightforward approach. If terms are discussed or agreements are reached, both participants should fully understand their roles.

Of course, because the IRS has this seemingly unflappable ability to immediately pounce on and seize your home, your land, your beater car and the naming rights to your next five children, one can fully understand why a successful contact with the IRS is oftentimes viewed as more difficult to achieve than that paranormal expert who devised a method of communicating with aliens via hand signals in Close Encounters of the Third Kind.

In reality, IRS Customer Service reps and Collection reps, as well as Revenue Officers and Agents, all have a keen desire to collaborate with you and come to an acceptable resolution regarding your liability. They are employees of the government, have families to support and have the same basic needs as everyone else. You should expect to be treated with dignity and respect, and you should enter the conversation or meeting ready to display those same qualities.

If you're harboring a chip on your shoulder the size of a serving platter, lose it. Clinging to your negative opinions or resentful judgments will get you nowhere, and could cause you additional monetary heartache. Remember, the IRS is prevented by law, Congress, and their own systemic checks and balances from taking any type of enforced collection until proper notice has been served. If you feel that you've been unfairly treated, there are options and rights that you are free to exercise. An IRS agent will be more than willing to discuss why you owe, how to correct it, what your rights are and how to prevent this same situation from occurring. In fact, it's part of their job to see that this is done.

There are some basic standards that should be adhered to both prior to and during any contact with the IRS. Easily the simplest, yet most often ignored principle is to immediately contact the IRS as soon as you receive a bill, a proposed assessment letter, or as soon as you realize that you have a tax balance that you cannot satisfy by the due date of your return.

Perhaps it's human nature to withdraw and zip up the dome tent when one is faced with a seemingly convoluted problem with no way out, but the IRS is not the hare that will just blow you by as you're struggling to finish the race. Guaranteed, the IRS would prefer to handle your issue as soon as it arrives, rather than sending notice after notice, making call after call, and eventually garnishing wages, filing a Notice of Federal Tax Lien, or referring your case out to a field representative to make the dreaded "house call."

But the biggest mistake one can make is to ignore their situation under the guise that somehow it will all slip through the cracks. The IRS may be slow to respond at times, but they keep their house in order, and the driveway up to it is well-paved.

But what about those tax professionals, lawyers or CPAs that are so eager to shoulder your burdens and spit out an unbelievable deal for "pennies on the dollar?" Is negotiation with the IRS better left to these seasoned veterans of tax warfare? At times, perhaps so. Although there are NO options available to an authorized representative that are not available to a taxpayer directly, an enrolled agent, or one that has been recognized by the IRS as technically proficient to practice before them, sometimes these individuals may be better suited to handle large liabilities, appeal issues, or other specialized problems.

And please, don't be duped by the radio spots and television ads from companies that guarantee they can hand you a settlement for a fraction of what you legally owe. There's only one program that the IRS has in place for compromising on a tax debt. It's called "Offer in Compromise" and it's designed for taxpayers to do themselves, without having to fork over a grand or so to a big-name company. Read what the IRS has to say about these "penny on the dollar" hawkers.

Another tip that seems simple enough... File your tax returns timely. If you realize that April 15^th is going to pass by and your mailbox won't have anything outgoing in it, file an automatic 6-month extension via Form 4868. Realize however, that an extension to file is NOT an extension to pay. The IRS still wants to see you make an estimation of what you owe by the due date of your return; failure to do so will incur penalty and interest. If you know you cannot full pay the amount you owe when you file, send in your tax return with a request for an installment plan using Form 9465.

Be honest and respond timely to all stated and written deadlines. Don't blame the IRS for the predicament you have put yourself in. If you owe taxes, it's generally because you have not had the proper amount withheld from your wages. If you are self-employed, make sure you have an understanding about your requirement to make estimated tax payments. Publication 505 would help you in this regard, as would the IRS Tax Withholding Calculator.

And make sure you don't get caught up in any "un-taxing" or "de-taxing" schemes that are so prevalent. If you've think you've found a loophole in the tax code, think again. Chances are, any rousing standpoint you think you've stumbled on has already been heard by the IRS, litigated on in Tax Court, and dismissed as gobbledy-gook. If it seems too good to be true... ask Wesley Snipes.

Keeping the above in mind will ensure that your contact with the IRS will be painless and unproblematic, both for you and the tax man.