What does it mean to resolve a tax debt?
To the IRS, resolving a tax debt means getting the debt under control. That's also the taxpayer's goal. Well, they're not exactly the same thing. A taxpayer would like the debt to go away; but, that rarely happens.
To resolve a federal tax debt, there are 2 steps.
The taxpayer must first be "in compliance." That means that the taxpayer has filed all of the returns that are required so that the IRS knows how much the taxpayer's owes. A resolution requires that the IRS knows all of the taxes that it is owed. Important: This step is absolutely mandatory.
When it's not possible for the taxpayer to pay their debt in full within about 180 days, the IRS will seek to get the debt under control. That means setting up a payment plan or determining that the taxpayer is currently unable to make payments.