Negotiating IRS Debts

People often wonder if it is possible to negotiate IRS debts in the same way that you can credit card debts. The answer is yes and no. You can directly contact the IRS and attempt to negotiate a payment plan with them, which they are usually very flexible about. However, if you are looking to re-negotiate your total debt and pay significantly less than you owe, this is more difficult and most people are turned down by the IRS. If you try to take action without an agreement in place and completely stop paying your IRS installments, the IRS will likely garnish your income, place a hold on your bank accounts and re-posses your personal effects. Unsecured debtors, like credit card companies, cannot take these sorts of actions. At most, they can file a law suit, which most companies try to avoid because it is costly and time consuming.

If you do decide to negotiate your IRS debt, you should definitely consult an attorney first. If you owe over $10,000, you may qualify for an "Offer In Compromise". Visit the IRS website for more information. The IRS may accept less than you owe based on your ability to pay. They take a look at everything you own and your future earning power to determine if you can pay or not. Two things to remember are that the IRS has up to two years to decide whether or not to accept your offer and they say "No" over 85% of the time. If after researching the Offer In Compromise, you believe that you may qualify, contact a CPA or EA in your area that has experience with these.