Negotiating a payment plan

• 1). Calculate how much you owe the IRS. If it's $25,000 or less, you can negotiate with the IRS on your own. If it's more than $25,000, you may need to hire a specialist lawyer to handle the paperwork and negotiations.
  
  
• 2). Complete forms 655 and 433-A. These forms are available on the IRS website. They help calculate how much you can afford to pay. The IRS won't accept an estimate.
  
  
• 3). Gather evidence that supports your calculations, such as copies of bills, paycheck stubs and mortgage statements.
  
  
• 4). Photocopy the completed forms and supporting documents. Keep these for your records.
  
  
• 5). Mail the forms and the supporting documents to your local IRS office. You can find the address on past tax returns or by going to the IRS website and navigating to the local contacts page. You will receive a reply within a few weeks.
  
  
• 6). Confirm to the IRS that you agree to the new payment plan. If you're not satisfied with the plan, you can submit a counteroffer.
  
  

Negotiating a lump sum payment

• 1). Contact your local IRS office.
  
  
• 2). Ask if you can make a lump sum payment on your debt in exchange for the IRS dismissing the remaining debt. In most cases, the payment must cover a significant portion of your debt, although the percentage varies.
  
  
• 3). Provide evidence that supports your proposal. You will need to demonstrate you can make the lump sum payment, but that you couldn't pay the whole debt any time soon.