Myth #1: You Can Be Behind on Your Taxes and Still Negotiate With the IRS

When you’ve gotten far behind on your taxes, the debt can feel even more insurmountable than the first year you could not pay. As an intelligent person, you may be under the impression that you can work with the IRS and negotiate your way out of taxes, penalties, and interest you may owe. Even if you’re an expert in negotiating and have a way of connecting with others, unfortunately, the IRS has stringent policies that prevent negotiation.

You may have seen advertisements from tax attorneys or other tax professionals promising they can eliminate your tax debt by negotiating with the IRS. If professionals are making this promise, it’s understandable why many people believe this IRS myth, but it just isn’t true. As the adage says, if it sounds too good to be true, it probably is. When it comes to getting out of jail free with the IRS – that’s too good to be true. We will explain why the IRS rarely negotiates, discuss your options, and talk about how Highland Tax Group can help.

Why Doesn’t the IRS Negotiate?

The IRS works differently than other debt collectors; unlike other debt collectors, the IRS is a government agency. The IRS has less flexibility in collections for a few reasons:

(1) Tax laws are specific and stringent; the government will not break its own rules and regulations to accommodate delinquent taxpayers.

(2) Collecting tax revenue is crucial for ensuring the government has the funds to function.

(3) Exceptions cannot be made for every taxpayer.

(4) The IRS must send taxpayers a message that failing to pay, committing fraud, and making delayed payments are unacceptable.

The IRS does have what appears to be a negotiation option: the Offer in Compromise (OIC) program. The program allows taxpayers to settle their debt for less than the full amount owed, but proving you qualify is difficult, leaving most taxpayers in the same place they started.

I’m Way Behind in My Taxes; What Penalties Am I Facing?

You will face two main penalties if you have fallen behind on your taxes: the failure-to-file penalty and the failure-to-pay penalty. You will start accruing failure-to-file penalties as soon as the filing deadline has passed. The penalty will be 5% of the unpaid taxes you do not file for each month. The second penalty, the failure-to-pay-penalty, is also monthly, but at a rate of 0.5% of your unpaid taxes per month. Each penalty is up to, but cannot exceed, 25% of your unpaid taxes.

Addressing unpaid taxes and dealing with the IRS can be overwhelming, but you don’t have to go it alone. It’s time to hire a professional at Highland Tax Group. We will walk you through your options and work with the IRS to get you the best possible solution while minimizing your stress throughout the process. You will sleep better knowing you’re not alone; we’re looking out for your best interests and will always save you money when we can.