In Part III of our three-part series on "How to negotiate with the IRS," I discuss some tips and philosophies behind getting the best results from the IRS collections staff, whether you're dealing with an IRS Revenue Officer or an IRS ACS employee.
ANTHONY PARENT: Hey one suggestion when negotiating with the IRS
CLAUDINE GINDEL: Yes.
ANTHONY PARENT: Don’t call their tax code a disaster. Oops.
CLAUDINE GINDEL: (Laughs) We’ll edit that out.
ANTHONY PARENT: I think the first people that are going to agree with that, are people who work in the IRS.
CLAUDINE GINDEL: Yes, I’m sure.
ANTHONY PARENT: They’re going to be saying: “Yes, there is way too much to know.” There’s just way too much for anyone person to know. The amount of training they’re giving is a lot. If their case load is also huge, they have so many different competing goals that make their job nearly impossible. The reason why I’m saying this is because this directly goes into how to negotiate with the IRS Collections. It’s a terrible job.
CLAUDINE GINDEL: Yes. The fact that you said: “There’s half as many auditors or examiners as there once was"; I can’t believe how overwhelmed they must be.
ANTHONY PARENT: That’s the examiners and revenue officers. There’s about half of what they used to be. Yet, they have more-and-more responsibilities, and believe it or not the Federal Government has more revenue collected or assessed than ever before. Yet your collection staff is stripped out.
ANTHONY PARENT: It’s actually great time if you’re looking to negotiate with the IRS. Right now is a great time to get ahead of it if you’re going to do something like an offer and compromise. This is a great time because they want your case gone. When we’re dealing IRS Collections, understand the incredible constraints that they’re under.
If you owe the IRS a bill and you owe something under $20,000 – $25,000, that's a lot of money to you.You wonder how are you going to pay that back. You’re probably going to deal with something called: “Automated Collection Systems.” (ACS)
CLAUDINE GINDEL: Okay.
ANTHONY PARENT: When dealing with ACS, really what you’re dealing with is someone inputting stuff into the computer. They’re going to ask you your information, how much money do you make, what are your expenses. Then they’ll say: “Okay, based on this – we think you could pay this amount per month.” All they’re doing is entering stuff into a computer screen that’s spitting out a formula.
CLAUDINE GINDEL: Right.
ANTHONY PARENT: The problem there is this: You don’t know what numbers to tell them. There are a lot of deductions you may miss.
CLAUDINE GINDEL: Could you count your booze as an expense?
ANTHONY PARENT: You can.
CLAUDINE GINDEL: Okay, good.
ANTHONY PARENT: If it’s necessary, absolutely. I bet if you got a doctor’s note, you could get a doctor’s note to say: “She needs more booze.”
ANTHONY PARENT: The problem for a lot of people who owe a smaller amount of money is they don’t know how to negotiate.
They call the IRS and end up getting into some sort of payment plan that they really can’t afford to pay. So we see two things happening. They stop paying. They default their agreement with the IRS or they adjust their withholdings so they have more money in their pocket, so they can afford to pay the IRS.
We try to give people as many tips as we can to negotiate with them. If you’re calling ACS to negotiate a payment plan, the best advice I can give you is: “Go look at the allowable expenses for your area.”
CLAUDINE GINDEL: Okay.
ANTHONY PARENT: Really, if you go and max out those allowable expenses, you’re not going to get much of the typical time with ACS. They’ll just accept it at face value. Maybe your payments a little bit lower. I’m not trying to tell you to lie about something. But you don’t know what your rents going to be next year.
CLAUDINE GINDEL: So it is possible for an average Joe to negotiate successfully.
ANTHONY PARENT: Yes.
CLAUDINE GINDEL: Okay. I was wondering.
ANTHONY PARENT: Define Average Joe? If we’re going to define Average Joe as you then yes. But you’re really smart. You might not know everything about the IRS but you’re going to figuring things out. It’s how good are you figuring things out when the answer is not clear.
There is a right way to do it for sure. It takes detective work and I think if you’re able to get in that mode where you want to be that detective and figure out the crime no one else can do, then you could do it. Right.
You can do it but if you’re somebody who’s like: “Okay, this is all scaring me and I’m sort of wondering. I don’t know.” You’re going to have a hard time. You might just pray that an IRS person has pity on you.
Other options are low-income tax clinics. A lot of law schools have those and that’s where we pick up a lot of our attorneys come from there. They have experience doing low income. So you can get really great representation there. So good we hire them. We hire their alumni.
The tax payer advocates also for people but usually, they want you to try on your own first to get a plan that you can afford to pay back. Then if it’s something completely unreasonable they'll try to help. We’ve seen it, we’ve seen some really incredible denials. We’ve seen the IRS not allow someone their cancer medication.
CLAUDINE GINDEL: My goodness
ANTHONY PARENT: She didn’t make the $42,000 a year. She made $30,000 a year. She couldn’t drive anymore and this was before Uber came out. It was like five years ago. So she had to pay money to go to the doctor for the cab. Then she had out-of-pocket cancer medication. The IRS told her she could afford $300 a month, and we knew that would be impossible for her to afford.
CLAUDINE GINDEL: They wonder why they have a bad reputation.
ANTHONY PARENT: No way. Who made this decision? She hired us to help her and we fought to the nail just to get her cancer medication. I mean some of the stuff, it gets really strange like: “Why did you give this person a hard time?”
CLAUDINE GINDEL: The last thing I think I’m getting out of this is that you shouldn't get emotional when dealing with the IRS.
ANTHONY PARENT: When it’s your life or your business – that's hard to do. As we were talking yesterday in preparation for this, I tole you I would never use myself to negotiate my own tax problem.
CLAUDINE GINDEL: Yes.
ANTHONY PARENT: I couldn’t handle it for a second because it’s so invasive and so consequential as well.
CLAUDINE GINDEL: So it is possible then. What we’ve learned today is: “Yes, you can negotiate with the IRS which really surprises me.” I didn’t think it was possible.
ANTHONY PARENT: But negotiating with the IRS requires so much leg work and home work; it's not just calling them and working out a nice deal.
If you have a tax issue you need assistance with, contact us. We can help.