Negotiation Strategies for IRS Resolutions

NEGOTIATION STRATEGIES FOR IRS RESOLUTION

Lessons From High Stakes Diplomacy

by Darrin Mish, Attorney at Law*

Negotiation is an art—whether it’s between world leaders discussing international aid or a taxpayer seeking relief from the IRS. The recent breakdown in talks between President Donald Trump, Vice President J.D. Vance, and Ukrainian President Volodymyr Zelenskyy, provides valuable insight into what makes negotiations successful, and what causes them to fail.

While global diplomacy and tax negotiations may seem worlds apart, the principles of effective communication, preparation, and compromise apply equally in both scenarios. By examining the recent high-profile diplomatic exchange, we can extract key lessons that will help us navigate discussions with the IRS and work toward full and fair resolutions for our clients

1. Keep Emotions in Check 

Tensions ran high during the Oval Office meeting, with both sides expressing frustration. Trump and Vance voiced concerns about continued U.S. financial support, while Zelenskyy responded with strong pushback, defending Ukraine’s position and demanding security guarantees and assurances.

Emotionally charged exchanges like this often make it difficult to find common ground. The same is true when negotiating with the IRS. If you let emotions take over, whether due to anger, frustration, or fear, you risk undermining your position. Instead of reacting defensively:

• Stay calm and professional even if you disagree with the IRS’s position.
• Avoid personal attacks or accusations — focus on facts, not feelings or conjecture.
• Take a strategic approach by preparing your key points in advance to avoid impulsive reactions.

By maintaining your composure, you keep the discussion on track and increase your chances of a favorable outcome.

2. Come Prepared With a Clear and Balanced Proposal 

One of the biggest challenges in the U.S.-Ukraine negotiations was the perception that each side was asking for too much while offering too little. The U.S. sought significant concessions on issues like resource sharing, while Ukraine pushed for stronger security guarantees without agreeing to all U.S. requests. When both parties believe the terms are unfair, negotiations inevitably stall.

IRS negotiations work the same way. If you make demands without offering a reasonable solution, you’re less likely to reach a deal. Preparation is the key. Before speaking with the IRS:

• Gather all necessary documentation — tax returns, financial statements, supporting documents, affidavits, and correspondence.
• Understand what the client can realistically afford — whether it’s a lump sum, installment plan, or Offer in Compromise, and in what amount.
• Anticipate counterarguments so you can respond effectively without becoming defensive, resentful or obstructive.

The goal is to present a proposal that is fair to both parties under the circumstances, increasing the likelihood of a full and final resolution.

3. Acknowledge the Other Party’s Perspective 

A major factor in the breakdown of diplomatic talks was the failure of each side to fully acknowledge the other’s legitimate concerns. The U.S. prioritized American interests and financial constraints, while Ukraine focused only on its own national security concerns. Without a clear understanding — and acknowledgment — of the other party’s position, negotiations often feel like a zero-sum game.

When dealing with the IRS, it’s important to recognize its role. The IRS isn’t necessarily the enemy. It’s the government agency tasked with collecting taxes while following legal guidelines. You’ll have a much stronger position if you:

• Show willingness to cooperate — the IRS representative is more likely to work with you when he sees that your client is making an effort.
• Acknowledge their responsibility to enforce tax laws while explaining your client’s unique circumstances and needs.
• Emphasize a win-win outcome — for example, an Installment Agreement allows the client to pay over time while ensuring the IRS still collects revenue.

Recognizing the IRS’s position, while zealously advocating for your client’s best interests, makes for a smoother negotiation process. This idea is clearly recognized in Code section 6330(c)(3)(C), which requires (in a CDP hearing) that Appeals Officers balance any proposed collection action with the legitimate concern of the taxpayer that any collection action be no more invasive than necessary. Every presentation you make to the IRS should be couched in these terms.

4. Communicate Clearly and Transparently

One of the biggest challenges in the U.S.-Ukraine talks was communication. Mismatched expectations and unclear messaging made it difficult to build trust. Both sides left the table frustrated, believing they were not heard.

Similarly, IRS negotiations break down when communication isn’t clear. Misunderstandings or lack of transparency can lead to additional (sometimes unreasonable) scrutiny, delays, or even denied requests. To ensure effective communication:

• Be honest about your client’s financial situation — misrepresenting the ability to pay can backfire.
• Clearly outline what you’re asking for — avoid vague statements and provide specifics.
• Ask clarifying questions if you don’t understand something. This prevents future disputes.

Clarity and transparency build trust, making it easier to reach a mutually acceptable resolution.

5. Look for Mutually Beneficial Solutions

A critical issue in the U.S.-Ukraine negotiations was the inability to find a middle ground. Each side held firm to its demands without fully exploring creative solutions that might satisfy both parties.

IRS negotiations likewise almost always require compromise. The IRS’s main goal is to collect revenue, but it does have options that allow for flexibility. On the other hand, our goal as tax professionals is to reduce the liability as much as legally possible. Somewhere between these two poles is middle ground. So, instead of taking an all-or-nothing approach, consider these possible solutions:

• Offer in Compromise (OIC): If the client qualifies, this allows one to settle a tax debt for less than what is owed, often for just pennies on the dollar.
• Installment Agreements: This structured payment plan helps the client pay over time on reasonable terms, while keeping the IRS satisfied.
• Penalty Abatement: If there are valid reasons for filing and payment delinquencies, you may be able to reduce or remove penalties, which also leads to a reduction in assessed interest, making payment of the remaining liability that much more feasible.

By proposing a resolution that benefits both your client and the IRS, you increase the likelihood of acceptance and resolution.

Final Thoughts: Mastering the Art of Negotiation

The recent high-stakes diplomatic negotiations offer a clear lesson: when emotions run high, preparation is lacking, and communication breaks down, it’s difficult or impossible to reach a productive outcome. The same is true when negotiating with the IRS.

To navigate IRS negotiations successfully, remember these key principles:

1. Stay professional and composed — don’t let frustration take over.
2. Be prepared — know your numbers, your facts, the law, have documentation ready, and present a clear proposal for resolution.
3. Understand the IRS’s perspective — acknowledge the other person’s role while advocating for your client’s best interests.
4. Communicate transparently — be honest, polite, professional, specific, firm and clear.
5. Seek compromise — explore solutions that work for both sides.

Whether you’re negotiating an installment plan, disputing penalties, or seeking an Offer in Compromise, applying these strategies will put you in a much stronger position.

EDITOR’S NOTE: For more on effective negotiation and communication strategies with the IRS, see: How to Win Your Tax Audit.

* Darrin is an attorney in Tampa, FL, and long-time consulting member of  the Taxpayers Defense Insitute, A National Association of Tax Professionals In Defense of Taxpayers’ Rights. He can be reached at 888-438-6474 or at contactus@getirshelp.com

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Subscribers of Pilla Talks Taxes get this article and articles in this March issue including:

REPLACING THE INCOME TAX WITH TARIFFS
Can They Raise Sufficient Revenue?

THE TAXPAYER ASSISTANCE AND SERVICE ACT
Taxpayers’ Rights Legislation in the Senate Part II

THE CORPORATE TRANSPARENCY ACT
A Review of the Injunction Case That Stalled Enforcement
by Scott MacPherson, Attorney at Law

 NEGOTIATION STRATEGIES FOR IRS RESOLUTIONS
Lessons From High-Stakes Diplomacy
by Darren Mish, Attorney at Law

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