Originally Posted by Dirtdiver

Those settlements probably aren't what they appear to be for someone who hasn't dealt with the IRS.

A couple years ago my tax preparer didn't include one of my 1099s when he filed. I didn't notice it was missing either, since it was in the pile, just not on the form. IRS noticed it six months later, and the notice said I owed about $20,000. They put every deduction/expense in dispute. I really owed about $100, plus a little penalty.

Moral of the story, they send you a HUGE bill to get your attention. So when I settled for pennies on the dollar, I didn't get out of $19,850 in taxes, just fixed a small error. I suspect most of those "pennies on the dollar" stories are similar.