Some taxpayers qualify for an Offer in Compromise (a tax settlement), while others may qualify for an abatement (reduction/elimination) of penalties. Others qualify for a Partial Payment Installment Agreement, which technically does not reduce the debt, but can have the effect of having the taxpayer repay less than the full amount due. There is also something called Currently Not Collectable Status (CNC), in which the taxpayer pays nothing so long as he or she stays in CNC. Consult with a tax professional with experience dealing with back tax cases to see if you might qualify for any of the above.
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