No, the IRS won’t lower the amount owed, not even if you make a lump sum payment. Neither will California’s Franchise Tax Board (FTB), or any of California’s other tax agencies, the CDTFA (sales tax) and the EDD (unemployment tax). Tax agencies aren’t flea markets, or vendors: they don’t haggle on price. And, unlike other creditors like credit cards, tax agencies do not see themselves as collections agencies, where getting paid what they can, even if it’s not all that’s owed, is the main goal. Instead, they see themselves as law enforcement agencies, where the main goal is get paid what is legally owed, even if they get nothing at all as a result. Why?
Tax Agency Goal: Pay “Correct” Tax
Not only won’t tax agencies haggle on the amount of tax a taxpayer owes, but they also are legally prohibited from negotiating by the institutions that oversee them (Congress in the case of the IRS and the California State legislature in the case of the state tax agencies). Consider the fairness issue behind this rule: if your friends and family found out you were able to haggle the IRS down to a lower amount, even though you legally owed the original amount, then it would create an avalanche effect where many taxpayers try to bargain their way to lower amounts owed.
Also, what happens when people with excellent negotiation skills get bigger discounts than timid bargainers? How about if you’re lucky enough to get a new IRS Revenue Officer with little haggling experience, while I was assigned the IRS’ best negotiator? Not fair. And this lack of equity would increase public cynicism about tax agencies, something none of the tax agencies (or Congress or the California State Legislature which oversee the IRS and FTB respectively) wants.
Moreover, the IRS won’t haggle because it doesn’t have to: it has the full authority and power of the US government to take the money you owe it by force (levying bank accounts, garnishing wages, putting liens on real property). Why on earth would the IRS barter with you when it has all the power in the relationship? It won’t. You and the IRS aren’t in a two-way, voluntary exchange, like the guy in the white shirt and the woman in the hat in the photo above. You are in an involuntary, coercive relationship with the IRS: you WILL pay taxes, whether voluntarily or by IRS levies and liens. The IRS isn’t a potential supplier, or employee, or competitor: it has no obligation to negotiate anything. The only “power” taxpayers have is to make the case for why they don’t owe what the IRS says they do, or why they owe less than the IRS says they do. Many of my clients fail to understand this fundamental dynamic when they complain about tax agencies not “dealing” with them. Tax agencies don’t haggle because they don’t have to. Full stop.
The goal of tax agencies is for every taxpayer to pay the correct, legally-mandated amount of tax, and to collect that amount and only that amount. The IRS won’t try to get more than it’s legally due, but it will almost never back off of from collecting all that’s legally due to them (the one exception, is an Offer in Compromise, which it only rarely grants and then almost only to disabled and elderly people with no hope of future earning potential). Of course, it’s always possible to challenge the amount of taxes owed with the tax agencies, after an audit, for example, but that’s different than challenging the amount the tax agency determines is the correct tax owed when all challenges have been exhausted.
Assessment Vs. Collections Divisions
Both the IRS and the FTB are also institutionally structured to prevent haggling on the amount owed. How? Each agency is divided into the Assessment and the Collections divisions, and there is little communication between the two divisions. The job of Assessment is to ensure the correct, legally mandated amount of tax has been assessed. The audit function sits in Assessment and, when a taxpayer challenges an audit result, it is with Assessment. At some point, the IRS reaches as technical decision on the amount of tax owed. And then the case file is passed to the administratively separate Collections Division.
The sole function of Collections is to to collect the exact amount of tax assessed by Assessment. Collections is not set up to haggle on the amount owed, nor is it empowered to do so. When Collections comes after a taxpayer who owes, the presumption is that they are coming for the correct amount of tax that was assessed and where the taxpayer had many opportunities to challenge what the correct amount was.
Once a taxpayer file sits in the Collections Division of the IRS or FTB, the time for challenging the amount of tax owed is over. The only job of Collections is to collect the full, legal amount of tax owed. Tax agencies aren’t flea markets where the “price” can be haggled down. IRS after you? Call me at 818.889.8080.
April 7, 2026