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If The IRS Sends You A Bill That You Can’t Pay… Please Don’t Have A Heart Attack!

A few years ago, a client came to me almost at the point of a nervous breakdown. He had been recently audited by the IRS and subsequently received a tax bill in the mail for over $180,000! After briefly perusing the documents he brought in, I quickly realized that something was significantly amiss with this tax bill. So I advised him not to panic, but to leave his documents with me. After comparing the audit adjustments with his documents, I decided that we had to go and pay the IRS a visit.

A couple weeks later, we were sitting down with the officer who had conducted the audit and his manager, and after reviewing the audit adjustments together, the amount originally assessed was eventually cut in half. The audit officer, who appeared to be a rookie, had apparently done a very poor job.

The first lesson to be taken away from this scenario, is that you should always carefully review all audit adjustments the IRS makes, and compare them with your records. IRS officers are also human beings, and can also make mistakes.

The client, however, didn’t walk out of the IRS office with any smiles on his face, and understandably so, because he still had to come up with almost $90,000, which he was in absolutely no position to meet, because he was genuinely in dire financial straits at that point in time. So I gathered all the information I could concerning his current financial position and went back to the IRS; this time armed with an Offer in Compromise (OIC).

After a couple of months, the IRS finally accepted his offer, which was for just over $6,000 (calculated based on IRS formula), and to add the icing to the cake, the IRS also agreed to work out a manageable payment plan with him.

Not everyone might be this lucky, but the point is, contrary to popular perception, you can indeed negotiate with the IRS, and if you can prove that you do not have the ability to pay your tax bill in its entirety, chances are they will meet you half way.

And the good news is that you don’t have to go to an expensive tax professional or attorney to have them do this for you; this is something you can do on your own at no cost to you.

For information on how to apply for an OIC, grab a copy of the eBook, “Doing Your Own Taxes is as Easy as 1, 2, 3,” ($6.98) or “Understanding Your Taxes: Other Miscellaneous Tax Matters,”  ($2.98).  See these and my other books in the TaxConnections Book Store.



Milton G Boothe is an IRS Enrolled Agent with over twenty years of tax and financial accounting experience, including several years at PricewaterhouseCoopers. He is also a British certified Chartered Accountant. He is currently employed in private tax practices where he helps people resolve their tax problems, minimize their taxes, and routinely represents the interests of taxpayers before the Internal Revenue Service. As an Enrolled Agent (EA) Boothe is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the IRS for audits, collections, and appeals.
Milton G Boothe is also the author of several tax publications, wherein he encourages people to empower themselves by learning to do their own taxes.