Yes, there absolutely is. This is not just the stuff of urban folk tale. It occurs all the time through the use of a application that the dreaded Internal Revenue Service, themselves, has instituted to aid negligent tax payers settle back taxes. The program is known as an "
Offer in Compromise", or more succinctly an "OIC". The IRS has been known to admit as little as one (yes that's right, the whole number "1") per cent of an amount of money unpaid on a tax bill and call it even and done!
These OIC's are completely up to the government's judgement, simply because there is no legal entitlement to have a legitimate tax bill downsized by the IRS. That being said, the IRS must give a properly submitted Offer balanced judgment.
Consider the case of Henry who was living on a fixed income and discovered himself in debt to the IRS to the tune of $13000. That's because a back tax bill can grow at a fast clip with all the additional fees, penalties and interest that they attach to it. These things take on a life of their own after a while. Henry did the smart thing and enlisted the help of a settlement services advisor to represent his case to the IRS. The counselor wrangled a huge reduction from the full amount of $13000, getting it whittled down to a manageable $2000! This was an amount that Henry could afford to repay and get back to his life without the IRS haunting him.
If this OIC idea is starting to sound like it could be the ticket for you, keep in mind that merely wanting to do a deal with the IRS is not enough of a criteria. After all, wouldn't every one like to have his or her tax debt decreased? You first have to qualify for an Offer in Compromise by showing the IRS that one of the following conditions exist:
What the IRS calls "Doubt as to Collectiblity". Basically put there is some doubt as to whether they can collect the debt from you.
"Doubt as to Liability". There is some reasonable doubt as to whether you owe the tax bill at all. This one is highly unlikely.
Lastly, due to some mitigating circumstances, the payment of the full tax bill would cause you an economic hardship or would be unfair or unjust.
The final analysis here is if you think you might qualify for one of these juicy reductions in your back tax debt, you should seek professional help in making the determination, and if a good reason exists, engage them to represent you before the IRS. This is not something you want to do on your own. The saying from the legal profession " he who acts as his own attorney has a fool for a client" would also come into play in going before the Internal Revenue Service with an Offer in Compromise.
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