The Power of Thank You in a Negotiation with the IRS

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I want to tell you a story about the power of “Thank you” from a recent negotiation I was involved with the IRS and offer this to you relative to your negotiations with the IRS or others. This also ties into what I have learned from neuroscientist about how our brains work and that we are more receptive to other’s ideas when approached positively, warmly and openly.

There are a number of studies that have explored how others react when simply provided with the phrase “thank you.”[i] Some of evidence indicates that others feel twice as likely to help those that say thank you, helpers feel more valued when thanked and a more positive mood exists when others are thanked in the course of an interaction.

In my book The Servant Manager: 203 tips from the best places to work in America  there are four tips in particular that are on point with gratitude towards others.  These are

Tip 123 Initiate new beginnings

Tip 166 Find out what employees want

Tip 187 Decide what is important and spend your time there

Tip 194 Apply these rules from kindergarten

It is important that the thank you be presented in the right leadership voice to represent sincerity, honesty and a genuine appreciation for what someone else has done. It should not simply be a response to receiving something.

In the instance in question there had been a bad rapport between my client’s team the IRS team. I was brought in as a disclosure witness [ii] to assist with the resolution of the issue given my background at the IRS[iii]. When I arrived at a session between the IRS and my client, I knew one of my roles was to help de-escalate the situation. I made use of one of my tools from the chapter on de-escalation from my book Peaceful Resolutions. By working with my team to de-escalate beforehand, and to promote open ended questions and listening, it was possible to work with the IRS to understand what the concerns were by the IRS. My client had seen this as a position based interaction about bottom line dollars of adjustment instead of a negotiation based on interests. I was able to work with my client and their appraiser to de-escalate and address the underlying interests of the IRS.

In the course of discussions it was necessary to have papers copied. We were at an IRS office. One of the IRS representatives was kind enough to copy the documents for all participants. A relatively trivial activity, but someone had to do it. When the person returned, I looked at the individual, gave a positive smile, nodded and said “thank you very much for copying this for me and for everyone else.” The person was genuinely thanked for an act that was not all that significant. In the course of the discussion that followed I continued in this vein and framing the issues in neutral terms from each party’s perspective. I thanked those for agreeing with how I framed the issues for everyone in more neutral terms. This changed the entire dynamic of the meeting. Each side was beginning to see the other side as humans rather than as adversaries. It was important to phrase my appreciation in words that met the individual concerns, style and interests.

What happened? Over the course of a three hour meeting the entire temperament changed. A relationship was built. Individuals started listening to each other rather than trying to one up the other side. As a result both sides agreed that the issue was “gray” relative to certain variables. That concession by my client’s appraiser was critical. This resulted in the parties agreeing to a zone of possible agreement and the desire of each to have closure on this issue. If the case was unagreed on exam the IRS engineer (business valuer) would need to write up a much longer unagreed report. If it were agreed a short concise commentary was all that was needed. The IRS agent would have to write up a more lengthy report for an unagreed case. If it were agreed a shorter report would be required for the agent. The major differences initially identified were significantly reduced once clarification was presented relative to the facts in the case, the variables chosen and the rational for the decisions that were made.

My client had thought given the qualifications of their appraiser and the verbiage in the report the IRS should simply have accepted the appraisal. The appraiser had very good technical computations that were clear to follow, but the appraisal was lacking in the area of telling the story of the valuation[iv], on reconciliation of the valuation methods and reconciliation of the Discount for Lack of Marketability approaches.

In the end the parties reached an amicable decision that reduced the original IRS adjustment by more than 85%. This was acceptable to my client.

Keep in mind what an impact the two simple words of “thank you” or similar words appropriate to the individual such as “we appreciate that”, or “your understanding and consideration to this approach is appreciated”, can have on the participants. Here are 112 ways to say thank you if you are looking for alternative ways to reach out to the other side.  In the end, looking for ways to appreciate individuals in a negotiation can go a long way towards listening, relationship building and potentially collaboration.

Michael Gregory, NSA, ASA, CVA, MBA, Qualified Mediator with the Minnesota Supreme Court is an international speaker that helps organizations resolve conflict and negotiate winning solutions, client to IRS, business to business and within businesses. On point resources are available online at www.mikegreg.com and check out the blog. Mike may be contacted directly at mg@mikegreg.com or at (651) 633-5311. 

[i] https://hbr.org/ideacast/2017/04/sheryl-sandberg-and-adam-grant-on-resilience 9-20-2017

Rev. Proc. 68-29 and IRM 4.11.55.1.4.2.1 (04-20-2010) authorizes a third party to be present on exam or at appeals who has knowledge of facts pertinent to the matter involving the valuation issues in the examination

[iii] Mike Gregory was an employee of the IRS for 28 years and in his last 11 years headed up business valuation for the IRS nationally. He was also the champion of the three job aids released to the public. He has written 8 books related to technical business valuation issues and the IRS. See www.mikegreg.com/books

[iv] http://people.stern.nyu.edu/adamodar/pdfiles/country/narrative&numbers.pdf 9-20-2017

ttps://cup.columbia.edu/book/narrative-and-numbers/9780231180481 9-20-2017

https://www.entrepreneur.com/article/293064 9-20-2017