Certain special circumstances make people eligible for an Offer in Compromise, which is an agreement between the IRS and the taxpayer where the IRS accepts less than the full amount owed and the taxpayer’s debt is forgiven.
There are complex IRS formulas to determine which taxpayers are eligible for Offers in Compromise, so it is impossible to make a blanket statement about what makes taxpayers eligible. In general though, the first step is to file all delinquent tax returns, which can be done with the help of a tax aid service.
In the past the IRS has compromised for doubt about liability for tax debt, doubt as to whether the taxpayer would actually be able to ever pay off the full amount, economic hardship and other special circumstances. The best way to determine if you are eligible for this compromise is to make an appointment with an expert from Levy and Associates and go over your tax information personally.