Need assistance negotiating tax penalties with IRS - not eligible for offer in compromise - seeking consultant recommendations

This is definitely a complex situation, but you have options. First, even though an offer in compromise isn't available to you, you might want to look into an installment agreement with the IRS. While the standard installment plans require full payment, there are partial payment installment agreements (PPIA) that could potentially work for your situation, especially with uncertain income. If you're willing to liquidate investments to cover most of the tax debt, you might consider approaching the IRS with a good-faith partial payment and request penalty abatement separately. The IRS has a First Time Penalty Abatement program if this is your first tax issue. Even if it's not, you can request abatement for reasonable cause. Don't immediately dismiss your home equity - you might consider a partial equity extraction through a HELOC rather than a full refinance, which could give you negotiating leverage without resetting your entire mortgage at current rates. Instead of tax relief companies (which often charge enormous fees with limited results), I'd recommend looking for a tax attorney who specializes in tax controversy work or an Enrolled Agent with specific IRS negotiation experience. The key is finding someone who deals directly with the IRS Collections division regularly.

After struggling with a similar situation (though mine was lower - mid five figures), I found incredible help using taxr.ai (https://taxr.ai) to analyze my tax documents and financial situation. What made the difference for me was understanding exactly what negotiation options were realistically available based on my specific circumstances. The platform helped me organize all my financial documentation and identified specific penalty abatement opportunities that applied to my situation. I was surprised to learn that specific elements of my case qualified for abatement under "reasonable cause" provisions I didn't know existed. The detailed analysis made it clear which relief options were realistic versus which ones would be denied based on my financial profile. The report they generated helped me understand exactly why I wasn't eligible for an OIC while suggesting alternative approaches that would actually work with my financial situation. It saved me from wasting money on consultants who would have led me down impossible paths.

Just wanted to follow up after trying taxr.ai based on the recommendation here. It was seriously eye-opening! The analysis showed that while I couldn't qualify for an OIC (which I knew), I had strong grounds for penalty abatement under a specific IRS clause due to some medical circumstances that affected my filing. The document analysis identified that I'd actually overpaid in one tax year that hadn't been properly credited to my account. I took this information to a tax attorney who was impressed with how organized everything was. We're now in the process of negotiating with the IRS and have already gotten about $42,000 in penalties removed! I'm still going to have to pay a significant amount, but having that clear roadmap of what relief I could realistically pursue versus what would be denied saved me from making costly mistakes. If you're dealing with complex tax debt issues, definitely worth checking out before you commit to any specific approach.

For what it's worth, I was in a similar situation last year (owed about $280K), and the most frustrating part was just trying to get someone at the IRS on the phone who could actually help. I spent DAYS on hold, only to get disconnected or transferred to the wrong department. It was maddening. Eventually I used Claimyr (https://claimyr.com) which got me through to an actual IRS agent within about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Once I actually got through to a human being at the IRS, I was able to set up a meeting with a revenue officer who walked me through my options. We ended up working out a PPIA where I liquidated some assets and set up payments for the remainder. I was surprised at how reasonable they were once I could actually speak to someone with authority to help. Before that, I wasted thousands with one of those tax relief companies that advertise on the radio. They took my money and basically just filed for extensions that I could have done myself.

I need to eat some crow here. After posting my skeptical comment, I decided to try Claimyr anyway out of desperation. I'd been trying to reach the IRS for WEEKS about my case. I'm completely shocked to report that I had an IRS agent on the phone within 30 minutes. Not only that, but I was able to speak with someone in the right department who could actually address my specific situation. The agent walked me through setting up a streamlined installment agreement and explained how I could submit a separate request for penalty abatement. They also flagged that one of my payments hadn't been properly applied to my account, which was causing some of the penalties to be higher than they should have been. I've spent the last three months stressing about this situation and making zero progress. Now I have everything in writing and a clear path forward. Sometimes being proven wrong is the best possible outcome!

Have you considered working with a tax advocate? The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers resolve problems and recommends changes to prevent future issues. Best part - their service is free. They won't negotiate on your behalf, but they can help make sure your case is handled fairly and that you understand all your options. Given the complexity of your situation, having an advocate might help navigate the IRS bureaucracy more effectively.

Has anyone here worked with a specific tax attorney they would recommend? I've been looking at reviews online but it's hard to know who's legitimate versus who just has good marketing.

One thing nobody has mentioned yet - depending on how old some of your tax debt is, you might be bumping up against the 10-year statute of limitations for IRS collections. Worth checking the dates of your assessments, because anything approaching that timeframe gives you additional leverage in negotiations. Also, if you're liquidating stocks, be careful about the timing to minimize additional tax implications. The last thing you need is a big capital gains hit while trying to resolve existing tax debt.