Negotiating with the IRS: Build a realistic resolution proposal

I have used the word negotiation throughout this book, and I want to correct an impression it may have created. Dealing with the IRS is not a negotiation in the way buying a car is. There is no price to haggle. The person on the other end of the phone cannot knock a third off your balance because you were persuasive. What they can do is apply rules to facts, and the entire art of the conversation is making sure the facts are complete, documented, and presented in the language the rules use.

That sounds dry. It is also where cases are won and lost. The taxpayer who understands it gets agreements the taxpayer who argues does not, and the difference has nothing to do with charm.

This chapter is about how to have the conversation: who you are talking to, what they can do, how to prepare, what to say, what not to say, and how to make sure what was agreed is what happens.

Who is on the other end

Four kinds of people, with different powers.

Automated Collection System representatives. When you call the number on a notice and there is no revenue officer assigned, you reach ACS. These are call-center employees working from screens and a manual. They handle enormous volume. They can set up installment agreements, place accounts in Currently Not Collectible status, release levies, grant First Time Abate, take financial statements by phone, and put short holds on accounts. They cannot accept Offers in Compromise, decide reasonable cause penalty requests, or exercise much judgment outside the manual. Each call reaches a different person, and each person reads the notes the last one left. Your file is the record of every call you have made. Behave accordingly.

Revenue officers. Assigned to larger, older, or more complex cases, and to almost all business cases. A revenue officer is a field collector with a caseload, a manager, and real authority: to approve or reject agreements, to file liens, to issue levies, to recommend seizures, to investigate trust fund penalties, and to decide how much latitude you get. Revenue officers have deadlines they are measured on. A taxpayer who helps them meet their deadlines by delivering documents on time is a taxpayer they want to close with an agreement. A taxpayer who misses appointments is a taxpayer they close with a levy.

Settlement officers and appeals officers. In the Independent Office of Appeals, for hearings. They are experienced, usually former collectors, and they have the authority to overrule the collection function. They are also bound by the same financial standards, and they expect you to arrive with the documentation they asked for. Chapter 16.

Offer examiners. Specialists in offer units who evaluate Offers in Compromise. You will mostly deal with them by mail and occasional phone calls requesting documents. Their job is verification. Make verification easy.

Preparation is most of it

Before any substantive call, have in front of you:

• Your notice inventory and the most recent notice for each year
• Your account transcripts, with the assessment dates and collection deadlines marked
• Your completed financial statement, with the supporting documents at hand
• A one-paragraph statement of what you are asking for and why, written down
• The specific release ground, program, or manual provision you are relying on, by name
• Your communication log, open, with the date and time already entered
• A pen, and ideally a second person to listen if the stakes are high

The written statement is the piece people skip. Write it. "I am calling to request that my account be placed in Currently Not Collectible status. My monthly income is $2,100. My allowable expenses under the Collection Financial Standards are approximately $2,320. I have completed Form 433-F and can fax it now." When you are on hold for ninety minutes and then a human answers abruptly, you will be glad the sentences are already there.

Timing

Call early in the morning, when the lines open. Call Tuesday through Thursday. Avoid the first week after a major notice mailing, the weeks around April 15, and the days right after a holiday. Expect to wait. The IRS's phone service degraded significantly during 2025 as the workforce shrank, and the National Taxpayer Advocate has warned that taxpayers with problems will have a harder time reaching anyone in 2026. Plan for the call to take a morning. Put the phone on speaker and do something else while you wait.

If the IRS offers a callback option, take it. If you are disconnected after a long wait, which happens, call back immediately rather than waiting for a better day; your position in the queue is gone either way.

A word on why the phones are the way they are, because it affects your strategy. For years the IRS measured taxpayer service mainly by the share of calls it answered, a number Congress and the press watched closely. The National Taxpayer Advocate has argued that this created a perverse result: the agency staffed phones to hit the percentage, leaving representatives idle between calls while paper correspondence, including the financial statements and penalty requests you will send, sat unprocessed for months. Her 2025 report recommended a lower phone target and more people on the paper. Whether the IRS takes the advice, the lesson for you is practical. The phone is for things that can be done on the phone: an installment agreement, a hardship status, a levy release, First Time Abate. Anything that requires a human to read documents will be slow regardless of how many times you call to check, and the call to check is itself part of the queue. Send it, confirm it arrived, and wait with your log open.

What to say

The conversation has a shape, and it is the same shape whether you are talking to ACS or a revenue officer.

Identify yourself and verify. You will be asked for your Social Security number, your filing status, your address, and sometimes a figure from a recent return. Have them.

State what you are asking for in one sentence. Not the story. The request. "I am requesting an installment agreement of $360 a month on my 2024 balance." "I am requesting release of the bank levy served on my account on the 14th because it is creating an economic hardship." The representative will know immediately what screen to open and what the rules are.

Give the facts that the rules care about. Income, expenses, assets, compliance status, the specific hardship. Numbers, not adjectives. "My rent is $1,450" is useful. "Rent is really expensive here" is not.

Answer questions truthfully and completely, and then stop. Do not volunteer information that is not relevant to the request. If asked whether you have other bank accounts, say yes and name them. Do not, unasked, describe the inheritance you are hoping for or the side business you are thinking of starting. This is not dishonesty. It is the ordinary discipline of answering the question asked.

Ask what the IRS needs from you. "What documentation do you need to approve this?" "What is the deadline for me to provide it?" "What is the fax number?" "Can you note the account that I am gathering this information?" Representatives are trained to tell you what they need. Many taxpayers never ask.

When you get a no, ask what would make it a yes. If you remember one sentence from this chapter, make it this one. "I understand you cannot approve that. What would need to be different for it to be approved?" The answer is usually specific: a filed return, a document, a different payment amount, a manager's approval. Now you have a path instead of a wall.

Confirm before you hang up. Repeat back what was agreed. "So the levy release is being faxed to the bank at this number today, my account is being noted as pending an installment agreement, and I need to fax the 433-F by the 28th. Is that correct?" Get the representative's name and ID number. Get a confirmation or reference number if there is one. Write it all down before you do anything else.

What not to say

I have watched people lose cases in the first two minutes. The patterns are predictable.

Do not argue about the fairness of the tax system. The representative did not write the Code and cannot change it, and the argument marks you in the notes as someone who is not focused on resolution.

Do not raise frivolous theories. Anything about the Sixteenth Amendment, sovereign citizenship, the definition of "income," or the legitimacy of the IRS ends the productive part of the conversation and can earn a penalty.

Do not threaten. Not with lawyers, not with the media, not with your congressman. If you intend to request a hearing or file a complaint, do it; announcing it as a threat accomplishes nothing and reads badly in the file.

Do not lie. Not about income, not about assets, not about why you were late. A financial statement is signed under penalty of perjury, and a verbal statement to a federal employee that you know is false is itself a crime. More practically, the IRS has your W-2s, your 1099s, your bank reporting, your property records, and your prior statements. The lie will be found, and when it is, every agreement built on it collapses.

Do not make promises you cannot keep. If you cannot pay $1,500 a month, do not agree to $1,500 a month to get off the phone. A defaulted agreement is worse than no agreement, because the next conversation starts with the default in the notes.

Do not make it emotional. You may be terrified. The representative has heard terror all day. State the hardship in facts: the rent, the medication, the payroll. The facts carry the hardship far better than the feeling, and the facts are what the manual lets them act on.

Do not call repeatedly hoping for a different answer. Every call is noted. A taxpayer who calls four times in a week asking different representatives the same question is a taxpayer whose file says so. If you got a no and believe it was wrong, the path is the manager, then the Collection Appeals Program or a hearing. Not the redial button.

Working with a revenue officer

If a revenue officer is assigned, the relationship is longer and more personal, and a few additional rules apply.

Return the first call or letter within the time it gives you. Silence is read as evasion, and evasion is what triggers levies.

If you cannot make an appointment, call before it, not after, and propose a specific new date within a week or two.

When asked for documents, deliver them on or before the deadline, complete, in order, with a cover letter listing what is enclosed. Revenue officers remember the taxpayers who made their job easy, and they have discretion that they exercise in favor of those taxpayers.

The Form 433-A interview is a sworn conversation about your finances. Be accurate. If you do not know a figure, say so and offer to provide it; do not guess.

You will likely receive Form 9297, a written summary of what the officer has requested and when it is due. Treat every date on it as a hard deadline. Missing one is how most revenue officer cases turn into enforcement.

If you want to record an interview, the law requires you to give the IRS ten days' advance notice, and the IRS may record as well. Most people are better served by taking careful notes.

If you believe the officer is being unreasonable, ask, politely, for a conference with the group manager. This is a right, it is routine, and officers expect it. If the manager conference does not resolve it, the Collection Appeals Program is the next step, within two business days.

Putting it in writing

Every important request should also exist in writing, either as the primary submission or as a confirmation of a phone agreement.

A letter to the IRS should be one or two pages. Your name, Social Security number or employer identification number, and the tax periods at the top. The request in the first sentence. The facts in the next paragraph. The enclosures listed at the end. Sign and date it. Send it by certified mail with return receipt, or by fax with a confirmation page, to the exact address or fax number you were given. Keep a copy of everything, including the proof of delivery.

A confirmation letter after a phone call is three sentences. "On October 14 I spoke with Ms. Alvarez, ID 1000-123456, who agreed to release the levy on my account at First National Bank and noted my account as pending an installment agreement. I will submit Form 433-F by October 28 as requested. Please contact me at the number below if my understanding is incorrect." This letter protects you if the release does not happen and the next representative has no record of the call. It happens more often than it should.

Verify

This is the RESOLVE step that gives this part of the book its name, and it is simple to describe. After any agreement, release, abatement, or determination, pull your transcript a few weeks later and confirm that what you were told happened actually happened.

An installment agreement should show on the account. A penalty abatement should appear as a reversal of the penalty code, with a corresponding reversal of interest. A levy release should have reached the bank or employer, who will tell you. A CNC determination should show as a code 530. An accepted offer should show the acceptance and, after payment, the lien release. An innocent spouse determination should show the adjustment to your account.

If it is not there, call, with your log open, and ask why. IRS processing is slow and error-prone, and agreements reached by phone are occasionally never entered. The taxpayer who checks catches the error in a month. The one who assumes finds out when the next levy arrives.

I would also pull your transcript once a year for the duration of any agreement or status, and again after each collection deadline passes, to confirm the balance is zeroed. Think of it as the tax equivalent of checking your credit report. It takes ten minutes and it is the only way to know that the system is doing what it said.

How Michael's second call went

I will end with the contrast, because it puts this chapter in one example.

Michael's first call to the IRS, the morning of the levy, went like this: an hour on hold, a shaky explanation that his business was about to collapse, several minutes on how unfair it was that the IRS had taken money without warning, a representative who patiently explained that final notices had been sent fourteen months earlier, and a request for a financial statement he did not have. Nothing happened that day.

His second call, three days later with his enrolled agent on the line, went like this: identification, a one-sentence request for a partial levy release to cover payroll on hardship grounds with an installment agreement to follow, the 433-F figures stated and faxed during the call, a direct answer to a question about the unfiled year with a commitment to file it within thirty days, a request for the release to be faxed to the bank's levy department at a number already in hand, and a read-back of everything agreed. Forty minutes, most of it on hold. The partial release followed eight days later.

Same taxpayer. Same facts. Same agency. The difference was preparation and the discipline of asking for one thing at a time in the words the system recognizes. That is the negotiation that works. It is available to anyone who has read this far.