Tips for Negotiating with the IRS

While dealing with the IRS generally involves submitting documents or legal authority to support a client’s position, in most cases the element of negotiating is present.  Negotiating becomes particularly important in dealing with the IRS where documentation may not exist, or the law is in the gray area.  Most practitioners will find that when dealing with the Examination Division, Appeals Office, and Collection Division, negotiating skills and techniques are helpful in resolving issues in favor of the client.

Almost everything is negotiable–even when dealing with the IRS.  Negotiating face to face with someone is generally more effective than negotiating over the telephone.  Accordingly, it is good policy to always arrange a meeting with the representative of the IRS.

In all levels of negotiations there is no substitute for preparation.  This includes knowing the facts of your case, the Internal Revenue Code, the Regulations, Internal Revenue Rulings and Procedures, the Internal Revenue Manual, Circular 230 and other ethical requirements.  Also, you should have a network of other professionals with whom you can discuss your case.

The following are general negotiating tips which, if followed, should give you a greater chance of success in dealing with the IRS:

1. Always be prepared.
2. Control information given to the IRS. The IRS tries to accumulate maximum information to use against the taxpayer.
3. Do not volunteer information unless it will help your position.
4. Only make concessions if you get concessions in return.
5. Do not give up too quickly.
6. Do not accept the IRS employee’s attitude–the IRS employee has a boss.
7. Do not accept the position of the IRS (i.e. ask for statutes and regulations that support their position.)
8. If meeting with the IRS is not going your way or is getting out of hand, terminate the meeting and reschedule for another time.
9. Have a good attitude when negotiating with the IRS. Results are better if you remain cool and unruffled under all circumstances.
10. Be in control at all meetings.
11. Present the taxpayer’s information to the IRS and use it to the taxpayer’s benefit.

In telephone negotiations, there is more chance of a misunderstanding, and it is easier for the other party to say “no”.  While it may be quicker to try to negotiate by telephone, it is riskier because you may not get what you want.  If you must negotiate over the telephone, keep the following in mind:

1. Have a checklist of points to cover.
2. Anticipate what the IRS will do and be prepared to make counter arguments.
3. Have relevant facts at hand.
4. Concentrate and avoid distractions and be a good listener.
5. Before the call is completed, summarize what was agreed upon and follow up on any action which is to take place with a written confirmation letter to the IRS.
6. Document the file concerning the agreement in case the file is transferred to someone else in the future.

Resolving your clients’ problems through successful negotiations with the IRS is not always easy, but it IS possible.  Negotiating with the Collection Division of the IRS is generally the most difficult but can also be done effectively.

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