Business & Finance Bankruptcy

How to Negotiate Tax Debt

By Business & Finance Last updated Tuesday, May/14/2024

1). Add up all of your tax debt, including back taxes, late penalties and interest.
2). Calculate how much debt you can afford to pay each month. Use forms 655 and 433-A to do the calculation. You can find them on the IRS website. Don't guess. The tax man will want to see the math.
3). Find the address of your local IRS office at www.irs.gov/localcontacts/index.html.
4). Send the two forms from Step 2, along with any supporting evidence requested in the forms. The IRS should reply within a few weeks with a proposed payment plan.
5). Decide whether to accept the proposed payment plan or submit a counteroffer. If you choose the latter, prove to the IRS that your calculations are correct.
6). Follow the payment plan you've negotiated. If you miss payments, the IRS can demand that you pay the remainder of the debt in one payment.

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