Tuesday, September 28, 2010

Negotiating Penalties & Interest With The IRS

Negotiating Penalties & Interest With The IRS

by James A. Gage

Negotiating with the IRS is not as hard as one would imagine when it comes to penalties and interest! Let me qualify that statement before I get a flood of e-mails telling me I don’t know what I’m talking about.

Let's say, you've gotten an IRS tax bill from your client to negotiate and not only does it state that they owe more taxes than they think, but it lists additional fees as well. These are penalty and interest fees, and they're standard IRS procedure. But is there anything that you can do about them?

First, interest is statutory, meaning its federal law- that under no circumstance and or situations can this interest be waived, unless the tax is forgiven or shown to be in error! However, interest can be deferred if you enter your client into an installment agreement or if you obtain a moratorium.

Secondly, penalties can be waived – finally some good news! However, they can only be waived after the initial principle, interest and penalties have been paid in full. Then you may apply for “Abatement”, AKA waiver of all penalties on IRS Form 843; of course this is not a guaranteed approval, but is based on the circumstances behind the delinquency(this is where you negotiating skills on paper will serve you well).

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***See you over on Negotiating For A Living ...

James A. Gage