How to Reduce IRS Debt After Payments

The consumer culture in the United States leaves many Americans struggling under overwhelming debt burdens. This can be credit card debt, lines of credit debt, mortgage debt or even tax debt. The IRS has much more power when it comes to collection than consumer credit agencies. The IRS can garnish your wages, place levies on your bank account and even come after your assets. It's in your best interest to settle your IRS debts before paying down other debts.

Instructions

1

Collect all the statements confirming your previous payments to the IRS. The IRS will be more willing to settle your debts for a lower amount if you have made good-faith payments on your debt. This can be proven through canceled checks, bank statements or online confirmations.

2

Pull together all of your income documents. The IRS will not settle your tax debt unless you can reasonably prove that you need debt relief. For example, if you have more than $1,000 in disposable income each month, the IRS will not think of lowering your debt load.

3

Contact a local IRS representative. See Resources for a link to local IRS offices in your state. Arrange a face-to-face meeting. This will ensure that both you and the representative are focused entirely on your settlement agreement. Bring all documents from Steps 1 and 2 to the meeting.

4

Ask for a specific settlement and back up that number with reasons. For example, if you owe $20,000 in back taxes, but you can only afford to reasonably repay $10,000--ask for $10,000. You will likely not get this large a settlement, but this will kick off the negotiation.

5

Counter the IRS representative's offer. The goal is to be assertive and confident in the assessment of your ability to repay the debt while not offending the representative. Compromise when you can, but shoot for the best deal.

6

Get the IRS tax settlement in writing. You may be asked to make a one-time lump-sum payment to reiterate your intention to repay the full debt.