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Tuesday, March 11, 2014

How to fix your relationship with the IRS

By Mary Sutton

If you're having problems with the IRS, you need a special kind of defense. Follow these basic steps to impress the IRS and fix your federal tax issues.

Working with the IRS is often a better than choosing not to
Cooperating with the IRS has its benefits
Valentine's Day may be over, but we thought you might still need some help with one of the most challenging relationships of all: your relationship with the Internal Revenue Service. Whether you are nervous about your first interaction or anxious about recharging a stale connection, these pointers can add new life to your Internal Revenue relationship.

1. Talk it over

Communication is the key to any relationship. When the IRS believes you've done something wrong, no amount of ignoring the situation will make it go away. In fact, if you do nothing, you may be acknowledging that you owe the debt.

As soon as you receive a notice of back taxes or penalties, pick up the phone and speak with a revenue officer. You'll learn what you need to do to "apologize." You may need to challenge the amount of taxes owed or put together a defense for your network of deductions and credits. You may need to work on paying the debts from previous years so you can start a payment plan for the current year. No matter what actions you must take, be respectful and get everything in writing. If you appeal to the revenue agent's analytical mind, you may even receive an apology.

2. Present a small gift

There's no better way to say "I'm sorry" than with a token of affection. While IRS agents aren't too keen on flowers and diamond earrings, they do like to see checks addressed to the federal government. By making a good faith effort to eliminate your tax debt, you increase your odds of gaining a beneficial outcome overall. The IRS official may waive some of your penalties or permit you to enter an installment program to pay back taxes over time.

Keep in mind, however, that the Internal Revenue Service still wants what it is owed. The agency charges interest on outstanding balances and has specific guidelines for debt negotiations. If you are truly experiencing a financial hardship, you can consider turning to the offer in compromise program. Only about one out of five taxpayers are approved but, if you qualify, you can settle your government debt for less than you owe.

3. Hire a professional counselor

Finally, when you feel your relationship is beyond repair, you need to seek the help of an accredited professional. Accountants, tax attorneys, enrolled agents and experienced specialists can talk you through different options. Counselors are especially helpful with large debts, complex matters or situations that are taking too long to be resolved. They can help you develop a strategy that may satisfy the IRS, including long-term installment plans, lump-sum payoffs and collection delays.

When you chat with someone experienced in IRS relationships, speak honestly, lay everything out and bring your documentation. Without all the facts, a tax defense counselor may inadvertantly promise too much and deliver too little.

About the author: Mary Sutton is a Senior Writer for Fertile Content and a frequent guest contributor to many blogs Google+

Image license: 401(K) 2013, CC BY-SA 2.0