Why not ask the people to make nominal payments, and use those payments to purchase additional discounted debt? This would both solve the IRS problem and potentially make this a self-sustaining venture.
Well, you could actually use the tax issue as a powerful incentive to pay. "You have a choice: you can pay a small amount every month, or we can write your debt off in full. However, if you choose the write-off, please be aware that you will be liable to the IRS for the full amount of the taxes. You may find it easier to work with us rather than them".
