The IRS does not treat people who willfully break the tax code lightly. This is called tax evasion. They treat situations of evasion differently than they treat differences in tax law interpretation.

If you interpret the tax law differently from the IRS and there is an actual ambiguity (no sovereign citizen BS), if you do end up owing the tax you will still need to pay it, plus interest owed.

If they prove that you evaded taxes, you need to pay the taxes, interest, and heavy penalties. There is also potential for jail.

There are many lines that can be crossed and an accountant will help you navigate them. Tax avoidance is legal and encouraged. The IRS does not want you to pay taxes you do not owe. It may disagree with you at times, and there are avenues for resolving those disagreements. On the other hand, the IRS frowns down upon tax evasion and will hit hard.

> Do they actually negotiate the amount of tax to pay? I know they will negotiate on payment terms.

Confused, did you click the link at all? It literally answers your question right there at the beginning:

> An offer in compromise allows you to settle your tax debt for less than the full amount you owe. [...] We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.

Not based in the US, but due to general tax law complexities, tax authorities definitely negotiate over the specifics and interpretations of laws, as well as the amount payable (source: personal experience).

Having a good lawyer from an established firm with an excellent name helps a lot as well. If you're small fish, don't be surprised if civil tax servants try to bullshit you on the law. Be willing to fight (and prove them wrong), or be eaten.

On one particular case I'm aware of (friend of a friend), a seven figure tax sum was payable. They eventually settled everything for $25k because they weren't sure of their case.