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IRS Debt Settlement Negotiation: Five Common Mistakes to Avoid

It is not hard to see people breaking out in a cold sweat or taking antacid tablets whenever they receive that little envelope from the IRS. Actually, the IRS itself acknowledges that how intimidating the federal agency can be. When people face an IRS tax problem, the first thing they want to do is to bury the issues into the dark recesses of their mind. But more you run away from the problem or rush in getting rid of back tax issues, more trouble waits for you.

IRS Debt Settlement
IRS Medic

Only very few taxpayers are prepared to confront the IRS head on and address the problem immediately. Among them, again only very few know about the most common tax mistakes that happen during negotiation with the IRS for debt settlement. This article will share some of the major mistakes taxpayers generally make when they try to settle a debt with the IRS.

Mistake#1: Not being tax compliant
In order to make an agreement or settlement over your tax debts with the IRS, you must first make sure that you are in full tax compliance. This means that you are expected to make estimated tax payments or if there is withholding on your income, it should be correct. You should have also filed your tax returns up to the current year. You will have a hard time negotiating with the IRS if you fail to meet these requirements. At these times, it is best to get the help of a tax attorney to do the talking for you.

Mistake#2: Not choosing the right debt settlement option
The IRS Offer in Compromise (OIC) program is one tax resolution method that is getting all the publicity in recent times. But the OIC won’t work for all. There are other options like installment agreement and partial payment installment agreement that can work best for certain cases. Chapter 7 Bankruptcy can be another great legitimate option for people with overwhelming financial problems.

Mistake#3: Believing the IRS proposals will be in the taxpayer’s best interest
IRS employees are representatives of the government. They may be a nice person in general, but they work for the best interest of the agency and not to you. If you think that IRS revenue officers are out there to mainly help you, then it means you are not aware of the truth. Their every action is aimed towards collecting maximum money from you in the shortest time and not in finding a tax solution for you.

Mistake#4: Not giving correct information in the IRS forms
Many people are completing forms 433a, 433-b and 433-f just like filling a tax return. What we need to understand is that these are not just documents but valuable persuasive tools. So it is very important to get these forms done correctly.

The IRS will scrutinize all the disclosures you make in this form very closely before they accept for partial payment. So present your story backed with solid information or better get your documents thoroughly reviewed by a tax expert. If you miss things like vital expenses while filling out, you will be made to pay more than what you can afford.

Mistake #5: Not fighting for the right solution
Like everybody, IRS employees also make mistakes quite often. In that event, the taxpayer can request an appeal hearing with the IRS office of appeals. But the appeal cases have time-sensitive deadlines and can become highly technical. So in order to protect your IRS appeal rights, it is best to have your decision to appeal reviewed by an experienced tax lawyer.