A compromise offer is an agreement between a taxpayer and the IRS that settles a tax debt for less than the total amount due. A transaction offer is an option when a taxpayer can't pay all of their tax obligations. It is also an option when paying the entire tax bill would cause financial difficulties for the taxpayer. The goal is to achieve a commitment that is tailored to the interests of the taxpayer and the agency.
To negotiate a favorable tax settlement agreement with the IRS, you need to know where you stand. First, talk to an accountant and see if they can reduce your overall tax liability. You have up to three years to file a revised return. If you did your taxes yourself, you may owe less than you think once a professional reviews your return.
The short answer is yes, you can negotiate with the IRS. You can work directly and successfully with the IRS to complete a tax agreement, but taking advantage of a free consultation from a qualified professional before starting is a good way to get a favorable settlement you can live with. Deciding to go alone or work with an IRS-approved certified registered agent or a qualified tax negotiator can be a difficult decision to make. However, working with someone who has experience can make a big difference in the outcome of the negotiation and the amount of the agreement.
This first step to IRS tax settlement is mostly mental, but it may very well be the most important. The IRS cannot collect taxes due after the tax collection law's due date, usually 10 years after the day the taxes were due. However, actions can suspend or extend the CSED, so it's important to consult a tax professional to find out the exact date your back taxes will be due. If you consult an accredited tax professional and follow their instructions, you may be able to reduce the total amount of your back taxes, set up a payment plan, and get back on your feet when you start paying back taxes.