When facing a big tax bill, you have many resources to use in fighting it. Five ways to get the IRS to reduce the tax it says you owe:
1.Ask for a collection due process (CDP). After the IRS decides you owe tax, it may initiate a collection action, such as a lien or levy. But before doing so, it is required to advise you of your right to request a CDP hearing. Benefit: If you think the agent who sent the tax benefits made mistakes, didn’t understand your position, or was simply unreasonable you can make the case to the Appeals Officer (AO). The IRS wants to close cases at the CDP hearings. It doesn’t want them to go on to court where it will incur more costs and the risk of losing.
2. You can use Fast Track Mediation (FTM). FTM is a new method that is potentially very valuable to taxpayers but seldom used. FTM is available for audit and collection disputes. A specially trained IRS AO acts as an impartial mediator between the taxpayer and the branch of the IRS seeking to reach a voluntary agreement. The IRS objective is to settle these cases in 40 days. Depending on the amount, you may want to retain a lawyer, CPA or enrolled agent to represent you.
3. File a Freedom of Information Act request (FOIA). If you are having problems over a tax issue and just don’t understand what the IRS is thinking, file a FOIA request for the IRS file on your case. What you find may just be enlightening and useful. To make a FOIA request, visit www.irs.gov/foia.
4. Get help from the Taxpayer Advocate Service (TAS). TAS is an independent organization within the IRS that helps taxpayers resolve problems. Go IRS homepage and click on “Taxpayer Advocate” or call 877-777-4778.
5. Seek penalty abatement. The IRS routinely adds penalties to tax bills. If this happens, you can ask the IRS Agent to abate (remove) it. If your request is denied. Appeal to IRS Office of Appeals. Explain how your underpayment of tax or late filing of a tax return was due to “reasonable cause” not “willful neglect.” Ex. Divorce or death in the family.
1.Ask for a collection due process (CDP). After the IRS decides you owe tax, it may initiate a collection action, such as a lien or levy. But before doing so, it is required to advise you of your right to request a CDP hearing. Benefit: If you think the agent who sent the tax benefits made mistakes, didn’t understand your position, or was simply unreasonable you can make the case to the Appeals Officer (AO). The IRS wants to close cases at the CDP hearings. It doesn’t want them to go on to court where it will incur more costs and the risk of losing.
2. You can use Fast Track Mediation (FTM). FTM is a new method that is potentially very valuable to taxpayers but seldom used. FTM is available for audit and collection disputes. A specially trained IRS AO acts as an impartial mediator between the taxpayer and the branch of the IRS seeking to reach a voluntary agreement. The IRS objective is to settle these cases in 40 days. Depending on the amount, you may want to retain a lawyer, CPA or enrolled agent to represent you.
3. File a Freedom of Information Act request (FOIA). If you are having problems over a tax issue and just don’t understand what the IRS is thinking, file a FOIA request for the IRS file on your case. What you find may just be enlightening and useful. To make a FOIA request, visit www.irs.gov/foia.
4. Get help from the Taxpayer Advocate Service (TAS). TAS is an independent organization within the IRS that helps taxpayers resolve problems. Go IRS homepage and click on “Taxpayer Advocate” or call 877-777-4778.
5. Seek penalty abatement. The IRS routinely adds penalties to tax bills. If this happens, you can ask the IRS Agent to abate (remove) it. If your request is denied. Appeal to IRS Office of Appeals. Explain how your underpayment of tax or late filing of a tax return was due to “reasonable cause” not “willful neglect.” Ex. Divorce or death in the family.
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