After the IRS declines, you counter with, "Well, how about 60 cents?"

The officer's response will be, "Fill out these forms."

If you can't pay your taxes, IRS will make a deal, but on its terms.

The IRS authority to commandeer a delinquent taxpayer's car, home and bank account and garnish wages leaves the taxpayer in a weak bargaining position. Even so, the agency prefers avoiding the hassle of a long drawn-out battle.

"What are these forms for?" you might ask.

"To see how much we can get from a quick sale of your assets," the collection officer responds.

"How quick is quick?"

"We don't know."

So the apprehensive taxpayer begins to fill out the forms and comes to the space for listing necessary living expenses.

"What expenses are necessary?" the taxpayer inquires.

"That's up to the collection officer."

"Does the officer have any guidelines?"

"Not yet, the IRS is working on them."

"And in the meantime . . . ."

"It's up to the collection officer."

At this point the taxpayer understands necessary expenses won't include the cost of his Florida vacation.

Based on an IRS workshop, lawyers, Certified Public Accountants and others who work with dilatory taxpayers learned about the fine art of compromise -- IRS style. The instructor explained that the forms require a list of assets, liabilities, income and expenses. The schedule is used by the IRS to determine how much it can collect. Collection officers will not accept less.

Adding up the following will give a rough estimate of the amount expected:

• The furniture, television, VCR and stereo system sold at a garage sale.
  
• The market value of taxpayer's home equity reduced for a quick sale.
  
• The Federal Express stock the taxpayer owns outright or in an IRA, figured at the stock exchange price.
  
• The life insurance policy, figured at the loan value.
  
• The cash, bank balance and certificates of deposits.
  
• The taxpayer's monthly wages minus necessary expense. The IRS multiplies this net wage amount by 60 and reduces the total based on interest rates.
  

If the total from this list is less than you owe the IRS, you're a candidate for a compromise. Otherwise, you're not. The agency expects you to pay at least this total. It says it will not accept less; even if you offer 95 cents on the dollar.

But where do you get the money: Home equity loan, employer, grandma?

Should you cut a deal? If the amount is low enough, and you can get the money -- go for it. (more at IRS Collections)

Released 3-6-95