How to Negotiate with the IRS and Settle Your Tax Debt. Everything You Need to Know About Offer in Compromise, Installment Agreement and more

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Paying taxes is an essential part of being a responsible citizen. However, sometimes financial difficulties can arise, leading to unpaid back taxes. The Internal Revenue Service (IRS) is known for its strict rules and regulations regarding taxes. If you face back taxes, you may wonder if you can negotiate with the IRS to reduce or settle your tax debt. In this article, we will explore whether it is possible to negotiate your back taxes with the IRS and how to do it right with the best tax lawyer. 

Understanding Back Taxes

Back taxes refer to taxes that you owe from previous years. These taxes can accrue interest and penalties, making it challenging to pay off the debt. The IRS can take legal action against you if you fail to pay your back taxes, such as placing a lien on your property or garnishing your wages.

Can You Negotiate Your Back Taxes With the IRS?

The answer is yes; you can negotiate your back taxes with the IRS. The IRS offers several options to help taxpayers settle their back taxes. However, it is essential to note that negotiating with the IRS is not easy, and it is not a guaranteed solution. The IRS has strict rules and regulations, and you must meet specific requirements to qualify for any options.

Negotiating with the IRS is a delicate process that requires knowledge of the tax code and an understanding of how the IRS operates. A CPA firm can provide the experience and expertise necessary to navigate the complexities of IRS negotiations. 

If you cannot agree with the IRS on your own, a CPA firm can help you in the negotiations. They can provide insight into IRS regulations and processes and help you present your case to the IRS in a way that maximizes your chances of success.

Here are some of the options that you can explore to negotiate your back taxes with the IRS:

Installment Agreement

An installment agreement is a payment plan allowing you to pay back taxes over time. You can request an installment agreement with the IRS if you owe less than $50,000. If you owe more than $50,000, you must provide financial Information to the IRS to determine your ability to pay.

Offer in Compromise

An offer in compromise is a settlement agreement allowing you to pay less than you owe. To qualify for an offer in compromise, you must prove to the IRS that you cannot pay your back taxes in full and that the offer is the best option for you and the IRS. The IRS will consider your income, expenses, assets, and liabilities before deciding whether to accept your offer.

Currently Not Collectible

If you are facing financial hardship and cannot pay your back taxes, you can request that the IRS classify your account as non-collectible. This means that the IRS will not take any collection action against you, but interest and penalties will continue to accrue.

Innocent Spouse Relief

If you filed a joint tax return with your spouse, you may be eligible for innocent spouse relief. This relief prevents you from paying the tax owed if your spouse is responsible for the debt.

How to Negotiate Your Back Taxes With the IRS

Negotiating with the IRS can be daunting, but it is possible to do it right. Here are the steps to follow when negotiating your back taxes with the IRS:

  1. Gather Information

Before negotiating with the IRS, you must gather all the Information about your back taxes. This includes the years you owe taxes, the amount owed, and any penalties and interest accrued.

  1. Determine Your Eligibility

Once you have gathered all the Information, determine which option is best for you based on your financial situation. You can use the IRS’s online tool to determine your eligibility for each option.

  1.  Contact the IRS

Contact the IRS to request the option that you have chosen. You can do this by phone, mail, or online.

  1. Provide All Required Information

Once you have contacted the IRS, you must provide all the required information to support your request. This may include financial statements, tax returns, and other documentation.

  1. Follow Up

After you have submitted your request, follow up with the IRS to ensure that your request is being processed. Be prepared to provide additional information or negotiate further if necessary.

How can a Tax Professional Help Settle your IRS Tax Debt 


Negotiating your back taxes with the IRS is possible, but it requires careful planning and preparation. By following the steps outlined in this article, you can negotiate your back taxes with the IRS and find the best solution. 

However, it is essential to remember that negotiating with the IRS is not a guaranteed solution, and you may need to consult a tax lawyer for further advice.

Law Offices of Stephen B. Kass, P.C. is a New York law firm and CPA firm providing tax settlements, IRS litigation/negotiations, and business bankruptcy services. Contact us if you need a CPA firm for IRS negotiations!

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