Dealing with the IRS is something many people dread and try to avoid at all costs. However, trying to take on the IRS alone as a tax payer is also not a good idea as ‘self representation’ usually ends in failed negotiations. At the same time, if the person who represents the taxpayer when negotiating with the IRS is badly prepared, the negotiations will not only fail, but leads to even worse reactions from the IRS. Therefore, this article will describe several smart ways to negotiate with the IRS and be successful in reducing the tax burden to a certain extent.
Find suitable representation
One of the smartest moves when negotiating with the IRS is to find an experienced person or an organization to represent you rather than trying to cut corners by representing one’s self. Although having the services of an expert may cost a certain amount of money, there is a high chance of saving more money than the money given to the representative. This is because tax services prove successful in most negotiations. Thus, it is advisable for a taxpayer to find a suitable representative amongst Certified Professional Accountants (CPAs), attorneys and from enrolled agents.
Gather all the information and be prepared
Following choosing the right representation, it is up to the taxpayer to give all the necessary information to the representative by means of documentation; this helps build a case for the negotiation process. This information should include all disclosed and non-disclosed incomes and expenses, errors that took place during submitting tax documents as well as any documented evidence that substantiates the claims made. With the gathered evidence, the taxpayer and the representative should engage in a discussion as to how to proceed with the negotiations before starting the discussion or filing an appeal with the IRS.
A taxpayer should always be honest when informing the representative and therefore the IRA with regard to relevant information, as it will prevent a negative response from the IRA in the form of increased tax demands, reporting to federal authorities or even imprisonment for fraud.
Be conservative with appeals and offer in compromise
According to experts, the appealing process at the IRA is somewhat costly and may be a spontaneous undertaking done by many representatives due to its monetary gains. Thus, it is best to select a representative who would first assess the situation and assess other means of negotiation rather than opting to file an appeal or offer in compromise as the first option.
Know the right people to talk and the right way of presenting
Knowing the right people to talk to and the right way of presenting the case are two smart undertakings by anyone dealing with the IRA. While some IRA officials may be relentless in pursuing with the full tax demand, some would be linear when it comes to substantial and reasonable claims.
Prevent a confrontation with the IRS
At the same time, preventing tax problems with the IRS is a smarter option than trying to deal with the IRS after receiving a hefty tax demand. Thus, a tax resolution agency should be called in at the time of reviewing the tax documentation before it is filed at the IRS.
Finally, it is known that dealing with the IRS is no longer an easy task especially after recent administrative changes. Therefore, being honest thorough preparation, getting the right representation, and dealing with the right people in the right way are the smartest moves that can win a case during negotiations with the IRS.