Comments on: How to ask the IRS to give me a break

Question: How to ask the IRS to give me a break

derekb — Sun, 19 Nov 2006 21:02:38 -0800

How do I approach the IRS? They got me - dead to rights - I screwed up a few years back, when rolling over my 401K into a IRA (then into a downpayment for my house). I *thought* my credit union paid taxes on that money when I rolled it over. I made a mistake. Now, that I'm "caught up", and ready to pony up the delinquent taxes, what the best way to ask the IRS to waive the penalties? Say "Pretty, please?" Everyone says one *can* negotiate with the IRS. So how, would one go about doing so? What might one do to make a positive outcome more likely?

By: cschneid

cschneid — Sun, 19 Nov 2006 21:29:04 -0800

Do you have the name of a contact? On the letterhead that you got the notice on perhaps?

The key to getting your way with any monolithic organization is to get a face in it.

Sorry I can't be more help, but good luck.

By: vanoakenfold

vanoakenfold — Sun, 19 Nov 2006 21:29:14 -0800

I'd pay it. I'd now know what I did was wrong and fully admit it. It's like I'm talking to the officer that pulled me over and admitting I sped.

By: Pollomacho

Pollomacho — Sun, 19 Nov 2006 21:48:37 -0800

I think your willingness to admit your mistake and pony up is a good start.

Do you have an auditor or case manager? I think they'd be a good place to start.

By: kgn2507

kgn2507 — Sun, 19 Nov 2006 21:49:16 -0800

Write them an I'm so sorry letter. Tell them you screwed up and that it was an honest mistake you won't make again. Tell them the circumstances, and back it up with documents if you have any. Then ask them to forgive the penalties. I have done this many times on behalf of my clients and never lost. They will still make you pay what you owe but will almost always forgive the penalties.

By: Ironmouth

Ironmouth — Mon, 20 Nov 2006 01:06:17 -0800

This one is for a lawyer. He or she will have a good idea where the settlement sweet spot is. Let him or her do the negotiation. You will settle for less.

By: cowbellemoo

cowbellemoo — Mon, 20 Nov 2006 01:19:14 -0800

I think the general idea behind the negotiation is that the more you can pay and the faster you can pay immediately, the less and less they'll go after penalties. But make sure the agreement is binding before cutting any checks.

By: megatherium

megatherium — Mon, 20 Nov 2006 04:43:19 -0800

Either a lawyer (a tax lawyer), an enrolled agent, or an accountant would know how to approach them. Look up Offers in Compromise at http://www.irs.gov as a start.

The most important rule is one that will probably not bother you, but it is a stumbling block for some people:

The new IRC 7122(c)(1)(A) subsection requires that a taxpayer filing a "lump sum" offer must pay 20 percent of the offer amount with the application. A "lump-sum" offer means any offer of payments made in five or less installments.

By: theora55

theora55 — Mon, 20 Nov 2006 10:57:26 -0800

Look in the phone book under United States. Find the closest IRS office. Go in person, with complete documentation, and ability to make payment #1 of 20%, at the very least. Be polite & respectful and simply ask if they can help you get the penalties reduced.

By: CwgrlUp

CwgrlUp — Mon, 20 Nov 2006 18:16:43 -0800

I don't think you need a lawyer, you need an accountant. They know how to approach the IRS, how to write such an "I'm sorry" letter, and try to make it sound better than just 'oops, my bad.'