The Complete Guide to IRS Collections

Chapter 05

5 Strategies to Resolve Tax Debt with the IRS

Dealing with the IRS is a royal pain, regardless of how much or how little you owe. If dealing with the IRS Automated Collection System (ACS) is making you pull your hair out, here are five strategies that you can use on your own to get through. The good news is that these techniques are simple and do not cost anything. All it takes is a little planning and a lot of patience.

Many taxpayers get frustrated when dealing with the IRS ACS. After what can be some long wait times, taxpayers are sometimes presented with seemingly inflexible options for resolving their balance due to the IRS. After reaching an impasse with ACS, they often resort to hiring professional help to resolve their tax problems.

While I do appreciate the business from prospective clients, I am sympathetic to their financial difficulties and encourage them to at least try to resolve their own tax issues before turning to professional assistance. In the spirit of trying to encourage this, I have put together a short list of some of my best strategies for dealing with ACS.

IRS Tax Debt Negotiation Strategy No. 1 – Establish Rapport

One of my favorite sayings is that you “win more flies with honey than with vinegar.” No truer is that statement than in my experience dealing with the IRS Automated Collection System. In spite of any negative feelings you may have about paying taxes or about the IRS in general, realize the person on the other end of the phone is not to blame. They are people, too. They have lives and families outside of the IRS.

Many of them work for the IRS because they have a love of public service and/or of our country and they have a truly thankless job. All day long, people yell, curse at, and are generally nasty to these people. Even though most of them are pretty thick-skinned, sometimes I hear the trepidation of having to take another call and deal with who knows what on the other end of that phone call.

The first thing to do when you get on the phone with the IRS ACS representative is to disarm any hostility.

I thank them for taking my call if I have been waiting on hold for a really long time. Or I find out what area of the country they are stationed in and find any commonality that I may have with them (e.g., Philadelphia, my father used to live in Amblin; Memphis, boy I sure do miss the BBQ at Tops). If I do not have one, I make small talk and try to make the phone call as pleasant as I can.

It is much easier to get a favor, like a hold on adverse collection activity, from someone who likes you. Often I have found that you can get farther with a kind word and by being polite to the representative than the best knowledge of IRS collections procedure.


IRS Tax Debt Negotiation Strategy No. 2 – Know What the Game Plan is Going in and Take Control of the Conversation

When you call the IRS ACS, remember that you are about to have a conversation with someone who is going to impact your financial situation the most. The person on the other end of the phone deals with hundreds of cases in any given month. The fact of the matter is that this means more to you than it does to them. So you need to have your story straight before going into the phone call. 

Keep in mind what the result is that you are seeking and try to steer the representative toward giving you that resolution. For example, instead of telling the representative that you want to be set up on a payment plan, tell them you need to be set up on a $200 per month payment plan. 

Instead of asking for a hold on any adverse collection activity, ask them for two additional weeks and promise that you will resolve your account within that time period. By setting the tone of the conversation, you start out by defining a clear objective for the call. Whether or not the IRS ACS representative can actually grant your request, at least you have a starting point in your negotiations to work off of.

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IRS Tax Debt Negotiation Strategy No. 3 – Do Not be Afraid to Play the IRS ACS Lottery

I can often tell during the first minute of the call with the ACS representative how things are going to go. If the representative is rude or short with me during that first minute, oftentimes I will hang up and call back to get another ACS representative (what I call affectionately the ACS lottery).

There is zero point to spending an entire phone call arguing with someone, which will only frustrate you and is unlikely to lead to the result you are seeking. 

Why put yourself through such misery? Instead, if your representative if nasty or you get a bad feeling during the call, just bail. You may waste an hour waiting on hold in order to call them back, but you will be glad that you did when you get the result that you wanted.


IRS Tax Debt Negotiation Strategy No. 4 – For Payment Plans, Know Where the Line Is

Payment plans are based on a simple formula. Generally, if you owe $50,000 or less, your ACS representative will want you to pay your balance completely in a maximum of 72 months (six years). Take the amount of your liability and divide that by 72. That number is the minimum payment amount the IRS will be willing to accept without an accompanying financial statement demonstrating a hardship. 

There are a few exceptions; such if your liability is set to expire before the five-year period, but just keep that rule in mind. However, the IRS representative is trained to try and get as much out of you as possible.

In addition, those ACS representatives who are poorly trained may try to get you to go through the financial statement process anyway, even though you are eligible to streamline your IRS agreement. Also, keep in mind that any payment plan requires that you are current on all filings and do not have any that are outstanding.[1]

If you do go down this route, know that the IRS statute of limitations 10-year period can be extended if an installation agreement is put in place.

IRS Tax Debt Negotiation Strategy No. 5 – Get the Agent to Take Notes and Call Back to Confirm

I believe that at this point I have likely negotiated hundreds and hundreds of resolutions for taxpayers through ACS. Most of these have gone off without a hitch, my client is pleased, and everyone moves on with their life as it was. However, that does not mean the IRS has not burned me a few times because of the incompetence of the ACS agent on the other end of the phone.

This has happened less than 1 percent of the times when I have called the IRS, but it is an awful scenario for all involved when it happens.

I believe in being safe rather than sorry, so here are a few suggestions I have for making sure that your understanding matches the IRS’s when a resolution is agreed upon.

First, at the beginning of the call, the agent will state their name and employee ID number. It is always important to write this number down, as when calling back you will be able to assist the other agent in locating your first call. 

Second, repeat the resolution back to the agent to make sure your understanding of the resolution is confirmed. This will ensure that both of you are on the same page 

Third, ask the agent to indicate the resolution in the notes. Tell the agent that it is “really important” that you do not get levied and ask them to make sure to reflect whatever you resolution is in their notes. Some ACS agents may brush you off (they are trained to take notes on all calls), but this ensures that their notes will be especially nice and clear for anyone to read in the future.

Finally, I recommend calling back approximately one-to-two weeks later to confirm that your resolution is in place. It may be overkill for some resolutions, but having two separate people confirm something provides that extra level of security that the resolution you achieved is reflected on the books.


Planning Pays Off

By implementing these tried-and-true strategies when dealing with the IRS’s Automated Collection System, you can likely avoid the vast majority of the headache associated with calling them and may be able to save yourself hundreds of dollars by not having to resort to professional representation. 

Resolution for minor tax issues is not exceedingly difficult, it just takes a little advance knowledge of what you are walking into and a little negotiation on your end to be successful. I hope these tips have been helpful and that you are able to negotiate a successful resolution.

For more information or if you have any questions, please feel free to contact me directly for further help. Brotman Law has a proven track record in representing clients before the IRS and we are just a phone call away if you need us.

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