A letter from the Internal Revenue Service can understandably strike fear in the heart of anyone who receives it. When the back taxes are owed to the IRS, the penalties and interest begin to accumulate and can eventually eclipse the original amount of taxes owed. But the IRS will negotiate – if you know how.

It was recently reported that the American Legion in Albert Lea was able to negotiate a deal with the IRS on back taxes owed by the organization. The American Legion Post 56 owed $84,878 to the IRS and through the negotiated repayment plan will be able to avoid about $29,000 in penalties.

The specific reasons the IRS was owed money were not mentioned, however there is new management at Post 56, so one could assume that the previous leaders at the Legion has either intentionally or unintentionally not made the payments. The Minnesota Department of Revenue was also owed some back taxes, which will be repaid as of February.

The Legion Post is working on a number of financial initiatives to pay not only the tax debt, but also a mortgage debt and other debts as well. Twice monthly breakfasts, to which the community is invited, will help the Post whittle away at its agreement to pay the IRS $1,000 per month toward the back taxes.

For those who owe state or federal taxes, the good news is that the government will typically work with a company or individual that owes taxes, as did the American Legion did. It may also be wise to work with a legal and tax professional who can negotiate with the IRS or the state on your behalf.

Source: Albert Lea Tribune, “American Legion strikes agreement with IRS,” Tim Engstrom, Dec. 8, 2012