Can one ever settle with the IRS for less that he owes?

I get this question is some form at least once a week.  I have not answered it in awhile, so here is my answer.  The beginning of the new year is a good time to answer this.  Many times the answer is “Yes!”  The IRS is often willing to settle for less than the full amount owed. However, this depends on your particular circumstances.  Therefore, each case is unique.  The process is called an Offer In Compromise.  It is available only to those taxpayers who are current in filing all of their tax returns, so if you have unfiled returns, you must first file those returns before submitting the Offer.  The basic criteria for an Offer are that the taxpayer does not have the present ability to pay the tax and will most likely not have the ability to pay the tax over the remaining life of the statute of limitations for collecting the tax. If the taxpayer meets these criteria, he or she is a good candidate for an Offer. This is called an Offer based on “doubt as to collectability.”  There are two other types of Offers called “doubt as to liability” and “effective tax administration.”  Space does not permit explanation of those but many people who do not qualify for the first type do qualify for the others.