Negotiate with the IRS Your Own Payment Agreement

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Why hire an Attorney, Accountant or Tax professional when you can negotiate with the IRS yourself? While not everyone can handle their IRS tax debt problem themselves, before you go sending thousands of dollars to some company with a 1-800-phone number, let’s see if you can handle this yourself for free first. Stay away or you may be ripped off.

Case in point, the bearded con-man-supreme and morbidly obese “Patrick Cox” from “Tax Masters” who swindled Americans out of more than $200-million in fees through fraud and deception from unsuspecting desperate consumers seeking help with their taxes. People hired Tax Masters after watching Cox’s TV commercials.  Those people were also seeking the help of a tax professional regarding an IRS matter.  All they received from Tax Masters was lip-service, a fat credit card bill and the tax liability and the IRS itself never went away.  Those people after being swindled they had to pay the IRS anyway! They could have resolved their IRS problems or debts, by themselves and avoid getting ripped off. You need to be fully aware there are many crooks just like Patrick Cox and offices such as Tax Masters waiting for you to dial their 800-number so they can tell you a bunch of lies, steal you blind and give you nothing in return. Nothing but scam artists, snake oil sales men. Do not fall for it!  Go straight to the IRS and face the music! Here are more reasons why:

I have heard many stories about people who paid one of those TV 800-number tax companies thousands of dollars to help them with their IRS debt and when all was said and done, all they got was a monthly installment agreement with the IRS.  Those people could have used that money to pay down their debt–and done the installment agreement themselves for free.

Here is the first question:  Do you really owe the money in the first place?  That is pretty important.  If your taxes were professionally prepared and you have a huge balance due; you probably really do owe the IRS.  On the other hand, if you have not filed for several years and the IRS says you owe them lots of money–there is a good chance you do not.  Anybody can and does taxes better than the IRS any day of the week and twice on Sundays. Any CPA, H&R Block, VITA; even a really bad tax place can do your taxes better than the IRS.

True story:  A couple of years ago, a CPA friend of mine had a high school intern. She had only been there for a couple of days, a woman came to my friend with an IRS tax debt of $16,000.  My friend took the case and he asked the intern to just do the basic data entry work for him.  A while later the intern went to him and said, “I did the data entry but I’m afraid you are going to have to show me what I am doing wrong.”  “What do you mean,” he asked, “It is just data entry.”  “I know,” she said, “But I heard you say she owes the IRS $16,000 and on all the returns I input she is supposed to receive a refund!”  My friend looked over everything the girl had done.  It was perfect.  Instead of the woman owing the IRS $16,000, the IRS owed her $8,000. 

So when I tell you that anybody prepares a tax return better than the IRS I am not kidding.  Now you can go to an IRS office and they will help you with your return. Those people sometimes know what they are doing but those computers generated IRS returns that get mailed to you are absolute garbage.  Plain and simple.

Second question:  Do you owe less than $50,000?  Because if you owe more than $50,000, you will not be able to do an IRS streamline installment agreement.  If you can pay enough on the debt to reduce it to $50,000 or less; then you can do the streamline; otherwise, you are going to want to get some help with your debt to bring it down before attempting to do the streamline.  If you owe $52,000, you could pay some tax company $8,000 to negotiate for you, but if you paid $2,000 towards the debt, you could negotiate for yourself and still have $6,000 more to pay your debt or buy groceries or whatever.

Third question:  How much can you afford to pay each month?  Let us say you got hit with an IRS bill of $6,000 and you just did not have any money saved to pay it.  Look at your financial situation and figure out what you can afford.  What is the most you could possibly pay without causing yourself a hardship?  What is going to be your upper limit number that you can pay.  You need to think it through because you do not want to commit or make a deal to pay $500 a month if it means you lose your house.

Here is the mechanics of it:  In a perfect world you should be able to pay of your IRS debt within 2 years (24 months.)   So if you take that $6000 and divide it by 24, then your monthly payment would be $250.  If you can afford that–great!  That is the preferred timeline for the IRS to have you pay off your debt.

But if you cannot handle the $250 a month, you the IRS will be willing to go as far as 72-months (or six years) for you to pay off the debt.  So if you take $6,000 and divide that by 72 then you get to pay $85 dollars a month.

What you might want to do is negotiate the $85 payment, but then pay the $250 to get rid of the debt faster.  That way you have some wiggle room if you lose your job or have some other financial problems.

The IRS charges a fee of $105 for setting up the installment agreement.  It is lower if you set up direct debit from your checking account or it may be reduced if your income is low.  Make sure you ask about it; they will likely never tell you! If you’re trying to negotiate a payment agreement and things are just not going your way, it is okay to back out of the deal before you commit.  You may tell them you are re going to need professional help and that you will have to call them back later.

Once you do have an agreement, you have to hold up your end of it.  Make your payments on time.  If you are late, your installment agreement is void and you will have to start all over again–including the $105 fee for setting up the agreement.  Not to mention those nasty letters they send about putting a lien on your home and levying your bank account.

If you cannot handle the installment agreement yourself; maybe your tax issue is too complex or you are just too intimidated to deal with the IRS, in that case get help from a local professional.  You will need an enrolled agent or CPA because they are licensed to represent you before the IRS.  I recommend using someone near you which you can meet with in person. 

Sometimes, IRS debt issues will cost a few thousand dollars to settle in legal or professional fees, depending upon the work that needs to be done.  You need to ask and should know what is going to be done before you pay that kind of money out.  Ask questions, know why they’re charging you that much, and what you’re getting for it.  You have a right to know.  $8,000 for something you can do yourself is too high a price.  STAY AWAY FROM THE 800-NUMBER CROOKS!

By: Marcus Fontain, J.D.

President and CEO

Unimundo Corporation

This email address is being protected from spambots. You need JavaScript enabled to view it.

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Guest Sunday, 19 August 2018