And what if the payments had been made as part of an installment agreement offered under a federal tax amnesty program, which would totally eliminate accrued penalties and substantially reduce accrued interest? In many cases what makes tax debt unmanageable is the excessive accumulation of penalties and interest, which can end up being more than the actual outstanding tax liability. Under such a program actual tax debt would not be eliminated, and the government would collect that to which it is entitled at a minimal expense.
For those who are faced with tax debt, and tempted to throw their money at these scam artists, what the ads refer to is the IRS Offer In Compromise program. Ask your tax preparer about this program. He/she will be able to either help you submit an offer or refer you to a legitimate and responsible tax professional who can – for a substantially lower fee then what you would pay to the scam firms promising, but ultimately unable to deliver, “pennies on the dollar” settlements.