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The IRS will allow a taxpayer to either negotiate a tax settlement for less than the total amount owed or come to an agreement on another method for the IRS to collect taxes.
As you are at resent in an installment agreement with the IRS you are using one of the methods offered. Another method is called Offer in Compromise.
With an offer in compromise you will be required to make an offer to the IRS of an amount of money that you can afford to pay (payment plans available) and the IRS must be willing to accept that amount of money in order to wipe the remaining liability clean. When making the offer you will have to convince the IRS that the amount you offer them is equal to or greater than the amount that they would be able to collect from you through forced collections without forcing you into financial hardship.
Since you are in an installment agreement with the IRS, it may be doubtful that the IRS could not collect the full amount owed from you over time.
If you want to file an Offer in Compromise it is best to see if you qualify first. Most tax professionals will be able to analyze your financial situation and know if you are a likely candidate for the settlement before any filings are done. If you have a tax professional that you use speak with them. If you do not have a tax professional you can go over the requirements yourself.
Here is a link to the IRS page on OIC and all forms needed:http://www.irs.gov/businesses/small/article/0,,id=104593,00.html
Please read the IRS warnings on using people that make unrealistic promises regarding OICs.
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