Tax Time Isn't Over: 6 Ways to Talk to the IRS-if You Must

Last Updated Apr 14, 2011 1:53 PM EDT

You filed your tax return. You did your best to get it right without missing any valuable deductions. Now you're sitting on pins and needles, hoping your return doesn't garner any special attention.

The IRS audits little more than 1% of returns. So you're probably safe on that front. But you may be asked for supplemental information, and if you owe money that you weren't able to pay you can count on an IRS agent contacting you.

Don't panic. Maybe you made an honest mistake or maybe you lost your job or had health problems that drained your bank account. "The IRS has a number of channels for people to pay what they can, when they can," says Jim Camp, CEO of Camp Negotiation Systems. "You can improve your chances of getting a better deal." Here's how:

  • Do your homework Gather information relevant to your situation. Scour the Internet, including the IRS website, to find strategies, precedents, and tips. Know your rights.
  • Schedule face time Don't talk to the first agent who comes on the line. Make an appointment to meet with an agent face to face -- in their offices, not your home (where they can observe your lifestyle). Don't answer detailed questions over the phone. Talking in person gives you a better idea of what an agent is after and how tough they intend to be.
  • Bring your poker face Emotions like fear and anger can be deal-killers. Stay calm. Keep your voice low and speak slowly.
  • Keep the agent's needs in mind The agent isn't evil; he or she is doing a job and if they didn't need your cooperation they would not be talking to you. Think about how you can help the agent get what they need to close the inquiry. In many cases, that might be a payment plan that fits your budget.
  • Shut up and take notes The agent's job is to get you talking and volunteering information that can be used against you. Keep it short and try to answer with questions of your own like, "Why do you need those receipts?" Or "How did you decide to disallow these deductions?" This way, you can steer the dialogue and find out more about your options.
  • Make no agreements at the start The IRS wants you to commit to a payment plan quickly. But they usually leave some wiggle room and by drawing out the negotiation you may be able to get them to commit to a plan first, one that better suits your budget. Stay focused on the agent's language, and on getting him or her to reveal the extent of their flexibility.
Photo courtesy Flickr user chadmiller
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  • Dan Kadlec

    Daniel J. Kadlec is an author and journalist whose work appears regularly in Time and Money magazines. He is the former editor of Time’s Generations section, which was written and edited for boomers. Kadlec came to Time from USA Today, where he was the creator and author of the daily column Street Talk, which anchored the newspaper's business coverage. He has co-written three books, including, most recently, With Purpose: Going from Success to Significance in Work and Life. He has won a New York Press Club award and a National Headliner Award for columns on the economy and investing.