The Offer-in-Compromise program allows taxpayers to settle their IRS taxes for less or often much less than you owe (or what the IRS claims you owe).
Internal Revenue Code authorizes the IRS, to accept less than full amount of tax liability owed in any IRS civil or criminal case arising under the tax laws prior to the cases referral to the Department of Justice. For an Offer-in-Compromise to be accepted, the taxpayer must establish to the satisfaction of the IRS that the taxpayer either: has no means of paying the tax, or does not actually owe the tax.
The IRS will accept an Offer-in-Compromise when it is unlikely that the tax liability can be collected in full and the amount of the IRS Offer-in-Compromise reasonably reflects collection potential. An Offer-in-Compromise is a legitimate alternative to declaring a case as currently not collectible or to a protracted installment agreement. The goal is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the government